US grain futures were mostly lower on Tuesday, bucking a broader commodities rally, as rains expected in drought-stricken corn and soyabean exporter Argentina alleviated supply worries and profits were taken ahead of US government production data Thursday.
Light rain showers were expected in much of Argentina, where hot, dry weather has damaged crops developing in the world's No. 2 corn exporter and No. 3 soyabean exporter. The showers weighed on futures at the Chicago Board of Trade, but corn and soyabeans pared losses in thin volume. Corn actually turned slightly higher before ending flat, on ideas the showers would miss areas that most needed precipitation while temperatures stayed hot.
"This is a one time affair, it will help but it will be followed by more hot weather," said Don Keeney, meteorologist for MDA EarthSat Weather, who estimated 0.25 inch to 1 inch (0.63-2.54 cm) of rain will fall Tuesday to Thursday in Argentina. "There is a little better chance of rain next week, but not a lot," Keeney said.
Keeney also said very little rain was expected in southern Brazil and Paraguay and heat stress continues on corn and soyabean crops in those areas. The hot and dry weather in South America helped to push corn and soyabean futures to recent multimonth highs but traders on were evening positions in advance of the US Agriculture Department's January crop production report.
The government will release data on final corn and soyabean production for the 2011/12 marketing season in addition to US winter wheat seedings and stockpiles of each commodity. "This is the regular pre-report choppiness, with people eying Argentine rainfall," said Alex Bos, agriculture commodities manager at Macquarie Bank LTD in New York. "The market is leaning heavily to the bullish side in respect to corn stocks so it might take a real surprise to push the market much higher."
CBOT corn for March delivery ended unchanged at $6.52 per bushel after moving between positive and negative territory throughout the session. CBOT March soyabeans settled 1 cent lower at $12.32 per bushel in light volume while CBOT March wheat finished 2 cents lower at $6.39-3/4.
Many other commodities gained on Tuesday, bolstered by news that China brightened its outlook for metal demand. The Reuters-Jefferies CRB index, which tracks a basket of 19 commodities, rose 1.2 percent while US equities hit a five-month high. "We've run the market up here pretty good. We can support these price levels but we need more information before we can push it to the next level," said Shawn McCambridge, analyst at Jefferies Bache in Chicago.