Corn prices fall on Argentina's rain forecasts

AP News
Posted: Jan 05, 2012 4:02 PM
Corn prices fall on Argentina's rain forecasts

Corn prices fell Thursday after new forecasts predicted rain in Argentina, where the crop has already been damaged by hot, dry weather.

Investors speculated that the potential for significant rainfall could help stave off additional damage while the corn is pollinating. That could ease concerns about tight supplies at the end of the season. Corn prices fell 2.3 percent, while wheat declined 3.2 percent and soybeans were down 1.7 percent.

Argentina is one of the world's leading exporters of corn. Hot, dry weather has baked the crop in both Argentina and Brazil over the last few weeks, raising concerns that smaller harvests could cut into world food supplies.

A significant rainfall next week could stabilize the crop and prevent it from deteriorating. However it's not likely to reverse damage that already occurred, Northstar Commodity analyst Jason Ward said.

Corn for March delivery fell 15 cents to end at $6.435 per bushel. It fell as low as $6.39 per bushel earlier in the day. Wheat and soybeans also fell. March wheat finished down 20.75 cents at $6.2925 per bushel and soybeans fell 21 cents to $12.09 per bushel.

Other commodities were mostly lower as renewed concerns about Europe's crisis overshadowed a positive U.S. jobs report.

Europe's banking sector remained a focus for investors. Trading in the major Italian bank UniCredit was halted after the stock lost a quarter of its value. The bank said Wednesday that it would need to offer huge discounts to investors to raise money.

Hungary paid a high interest rate of 10 percent on its 12-month debt, prompting additional worry that the region's sovereign debt crisis could spread.

Meanwhile, the U.S. Labor Department reported a drop in the number of people filing for unemployment benefits last week. Also ADP, which processes payroll data, said private employers added 325,000 jobs last month. On Friday, the government will release a report on December job creation and the unemployment rate, which was 8.6 percent in November.

Commodities also were hurt by a stronger dollar. Since commodities are priced in dollars, a stronger dollar makes them more expensive for investors who use other currencies.

In metals trading, gold for February delivery rose $7.40 to end at $1,620.10 an ounce and March silver increased 19.9 cents to $29.296 per ounce. March copper fell 0.8 cent to $3.4265 per pound, April platinum decreased $8.30 to $1,418 per ounce and March palladium fell $9.15 to $644.40 an ounce.

Benchmark crude fell $1.41 to end at $101.81 per barrel on the New York Mercantile Exchange. Heating oil declined 5.11 cents to finish at $3.0388 per gallon; gasoline futures fell 4.87 cents to $2.7365 per gallon and natural gas declined 11 cents to $3.017 per 1,000 cubic feet.