La Nina may harm already low corn and soybean stocks, says US expert

GLOBAL corn and soybean stocks remain low, leaving both commodities vulnerable to the threat posed by the La Nina weather phenomenon to production in Argentina and southern Brazil, US Department of Agriculture chief economist Joseph Glauber said yesterday.

“Stocks levels for both those commodities are still quite low. There is a lot of volatility because of that and I think that the markets are reflecting that uncertainty right now.”

Corn and soybean prices on the Chicago Board of Trade have been rising as a drought centred on Argentina and southern Brazil threatens to reduce yields, particularly of corn as the crop enters its critical pollination phase.

Weather information service Cropcast on Tuesday reduced its forecasts for Argentine corn and soybean production and said further cuts may be coming.

Meteorologists have expressed concern that La Nina may also bring drier weather to the US grain belt. “Right now we are not anticipating drought but a lot can happen between now and planting time and certainly a lot between now and harvest time,” Mr Glauber said.

US corn planting runs from mid-April to June.

He also said genetically modified crops had an important role to play in satisfying future demand for food.

“As consumers see the benefit of these more enhanced varieties to meet nutritional deficiencies or other health attributes I think people will be much more interested and willing to purchase these commodities,” he said.

lRabobank is keeping a “neutral” view on fertiliser prices for the first quarter this year, saying farmers have cut back demand while inventories are still low. Urea prices fared the worst through the final quarter of 2011, with nitrogen and phosphate down more than 20 percent, Rabobank said. Urea and granular potash will be steady in the first quarter and diammonium phosphate will be lower.

Reuters