Forexpros – Corn futures regained strength on Monday, rebounding from the previous session’s one-week low amid renewed concerns over crop conditions in South America after forecasts showed diminishing prospects of near-term rain in Brazil and Argentina.
On the Chicago Mercantile Exchange, corn futures for March delivery traded at USD6.5112 a bushel during European morning trade, rallying 1.17%.
It earlier rose by as much as 1.38% to trade at a two-day high of USD6.5212 a bushel.
Corn prices came under pressure on Friday, falling to the lowest level since December 30 after agricultural meteorologists called for rain in Argentina over the weekend.
However, dry and hot weather conditions were expected to return to major corn growing regions in eastern Argentina and southern Brazil in the coming days, further threatening yields and reducing the quality of the harvest.
The Argentine Association of Regional Consortia for Agricultural Experimentation, a farming group, said in a report over the weekend that the recent bout of hot, dry weather could cause more damage to crops than the 2008-09 drought, which was the worst in 70 years.
The recent bout of dry weather in South America has been compounded by La Ni?a, a phenomenon in which tropical waters in the Pacific Ocean turn unusually cold. The La Nina weather pattern typically brings heavier rainfall in Asia and drier weather in South America.
Traders have been focusing on weather conditions and crop prospects in Southern Hemisphere countries in recent weeks, as most Northern Hemisphere grain crops have been harvested by now.
Markets were looking forward to Thursday’s closely-watched U.S. Department of Agriculture’s World Supply and Demand Report for revised forecasts of South American crop production.
Industry research group Informa Economics on Friday lowered its forecasts for 2011-12 corn production in Argentina and Brazil, citing dry weather that has cut yield prospects.
South America is the main competition for U.S. exporters and a smaller crop outlook there would likely mean greater demand for U.S. supplies.
Elsewhere on the Chicago Mercantile Exchange, wheat for March delivery rallied 1.75% to trade at USD6.3550 a bushel, while soybeans for March delivery rose 0.8% to trade at USD12.0675 a bushel.
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