Soft Commodities Round-up: Soybean Prices Down as Rain May Aid Brazilian Crops

on Oct 29, 2012
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**Brazil’s Soybean Production May Overtake the US**

Citing a QT Weather forecast, Bloomberg reported on 29 October 2012 that central and southern areas of Brazil, currently the world’s second-largest soybean producer and exporter, are expected to get approximately 1.5 centimetres of rain in the next five days. With such favourable growing conditions in the period when farmers typically plant the oilseed for harvest at the beginning of March, production of soybean in the South American country may see a significant boost. According to an earlier estimate by the US Department of Agriculture, this year, Brazil may even overtake the US as the world’s top soybean grower and exporter.

**Soybean Prices Decline for Third Straight Session**
Brazil’s weather forecast, coupled with the US Department of Agriculture’s projection, has hit soybean prices which fell for a third straight session this morning. On the Chicago Board of Trade, soybeans futures for January delivery traded at $15.4975 bushel, sliding 0.9 per cent. The price is down nearly 13 per cent since concerns about US drought sent the oilseed to an all-time high of $17.8888 a bushel on 4 September. According to analysts, the favourable planting conditions in South America may put even more pressure on soybean prices.

!m[Brazil Rain Forecast Brings Soybeans Down amid General Selling Pressure Caused by Hurricane Sandy ](/uploads/story/666/thumbs/pic1_inline.png)Agribusiness economist at the National Australia Bank, Michael Creed told Bloomberg today: “The key thing that the market is looking at right now is the crop and planting conditions on Brazil and Argentina. Rains forecast in Brazil may be pushing prices a bit lower.”

**Corn and Wheat Gain**
While soybeans traded lower this morning, corn and wheat prices were up after choppy trading last week. December corn traded 3.5 cents higher this morning, but weak export demand is expected to pressure the market in the coming days. Meanwhile, wheat futures have also posted firm gains, trading 5 cents higher despite strength in the US dollar index. According to analysts, dry weather conditions across the US and global supply worries should strengthen the market, however, strong losses in the soybean market could potentially spark sell offs in the wheat market.

**Hurricane Sandy Puts Pressure on Commodities**
The US securities industry cancelled equity and commodities trading today as Hurricane Sandy barrelled towards New York City. The CME Group Inc, which owns the Chicago Board of Trade, said in an e-mailed statement today that all of the company’s equity and futures options will remain open except for the US index.
Commodity prices are facing selling pressure to start the trading week as worries about the impact of Hurricane Sandy on US economic activity spark broad-based risk aversion. In an environment where traders continue to hope a pickup in the US will help offset sluggish performance in Europe and Asia, the possibility that Sandy produces a major dislocation represents a significant obstacle to risk appetite at large. Sentiment-anchored crude oil and copper prices are trading lower. Silver is likewise under pressure but gold is managing to hold up, trading little-changed on the day so far.

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