Corn hits $5 for first time since 2014, South America stays in focus

  • Market roiled by S. America dryness, Argentina corn export halt
  • Soybeans also extend gains to new 6½-year high
  • Wheat firm near 6-year top, weak dollar boosts U.S. prospects
  • Fund buying fuels price rally

By Gus Trompiz and Colin Packham PARIS/CANBERRA, Jan 6 (Reuters) - Chicago corn extended a rally on Wednesday to breach the $5 threshold for the first time in more than six years, as dry growing conditions in South America and Argentina’s suspension of corn exports stoked concerns about tightening global supply.

Soybeans also pushed to a new 6½-year high as risks to South American supply coincided with brisk Chinese demand that has already eroded U.S. stocks.

Wheat held firm near a six-year peak, with a weak dollar boosting U.S. export prospects amid doubts over availability in Argentina and Russia.

The most active corn futures on the Chicago Board Of Trade Cv1 were up 1.9% at $5.01 a bushel at 0949 GMT, after earlier climbing to $5.02¾, the highest since May 2014. Traders said they would be watching to see if corn would hold the psychological $5 level by the close, with some seeing scope for profit-taking after a rally fuelled by investment fund buying.

“A water deficit persists mainly in Argentina, leading to fears of a downward revision of corn production,” consultancy Agritel said. Rain forecasts in Argentina were showing less moisture than necessary to refresh parched soy and corn fields, weather experts said on Tuesday.

Brazil’s soybean harvest has started slowly in the top-producing state of Mato Grosso, lagging last year’s pace due to scarce rainfall earlier in the season.

Argentine supply is also set to be curbed by a government decision last week to suspend exports of corn until March, to ensure ample domestic food supplies. The news came just after a near three-week strike by Argentina oilseed crushing workers that disrupted supply from the world's largest exporter of soymeal livestock feed.

“The market is solely focused on South America and expectations of lower supply,” an Australian-based grains trader said.

CBOT soybeans were up 2.1% at 13.74¾ a bushel, after earlier setting a new high since June 2014 at $13.78¼. Wheat added 0.7% to $6.58¼ a bushel, trading near Tuesday’s six-year peak. Prices at 0949 GMT Last Change Pct End Ytd Pct Move 2020 Move CBOT wheat 658.25 4.25 0.65 640.50 2.77 CBOT corn 501.00 9.25 1.88 484.00 3.51 CBOT soy 1374.75 27.75 2.06 1311.00 4.86 Paris wheat Mar 218.50 0.75 0.34 213.25 2.46 Paris maize Mar 202.00 1.50 0.75 198.50 1.76 Paris rape Feb 433.25 3.50 0.81 418.25 3.59 WTI crude oil 49.98 0.05 0.10 48.52 3.01 Euro/dlr 1.23 0.00 0.29 1.2100 1.90 Most active contracts - Wheat, corn, and soy U.S. cents/bushel, Paris futures in euros per tonne

(Reporting by Gus Trompiz in Paris and Colin Packham in Sydney. Editing by Sherry Jacob-Phillips and Mark Potter.)

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