US soya rose 3 percent to a six-week peak on Tuesday while corn climbed more than 2 percent and into positive territory for 2011 as dry weather and outlooks for heat in South America threatened each crop. "The weather outlook is not favourable. There is still time for rain to fall, which would help crops, but there is no rain in the forecasts," said Mario Balletto, analyst for Citigroup.
Wheat jumped 3 percent to a six-week high and each market - wheat, corn and soyabeans - easily broke above technical resistance at their 50-day moving averages, touching off buy stops, a bullish market indicator. Wheat and corn have risen for 7 days in a row and soya for 8 days with soya and wheat notching the biggest one-day gainer in over two months and corn the most in a week. Investors were focused on the worsening crop weather in Brazil and especially in Argentina.
Argentina is the world's second-largest exporter of corn after the United States, the third-largest soya exporter and the biggest exporter of soyaoil and soyameal. Dry weather is a mounting problem in the key South American producer and weather in Brazil, the world's second-largest soya exporter, also is less than stellar. CBOT January soyabean futures were up 34-1/4 cents per bushel at $11.97-1/4, March corn was up 12-1/4 cents at $6.31-3/4 and March wheat was up 20-1/4 at $6.42-1/4.
Some support to wheat, corn and soyabean futures also surfaced because of a weak dollar, firm equities markets and gains in crude oil. However, the dominant driver in the markets was mounting concern about crop outlooks in South America. Widely followed crop scout Michael Cordonnier on Tuesday said he has cut his estimates for South American corn and soyabean production for 2011/12 and indicated further reductions may be necessary.
"Certainly this is an ominous forecast and if it verifies it would cause more harm to the crops and begin to stress soyabeans when they're flowering and setting pods," Cordonnier said. Cordonnier said he cut his outlook for Brazilian corn production to 60 million tonnes from his previous forecast for 63 million and reduced Argentine corn production to 27 million tonnes from his previous outlook for 28.0 million. The US Department of Agrculture (USDA) in early December pegged Brazilian corn output at 61.0 million tonnes and Argentine corn output at 29.0 million.