January 27th, 2012

Corn futures advanced, heading for the biggest gain in five weeks, as concerns that a renewed heat wave in Argentina may damage crops boosted demand for U.S. grain. Soybeans gained.

The weather pattern known as La Nina has brought hot, dry conditions to Argentina, Brazil and Mexico, scorching recently planted crops. Temperatures will exceed 40 degrees Celsius (104 degrees Fahrenheit) in some of Argentina’s corn-growing areas through Feb. 2, the Buenos Aires Cereals Exchange said yesterday. Rain will be scarce in most areas, said climatologist Eduardo Sierra.

“The market is certainly worried,” said Nick Higgins, an analyst at Rabobank International in London. “In the $6.40-$6.50 a bushel range the market is accounting for substantial reductions in the 11/12 corn crop for South America.”

Corn futures for March-delivery advanced 0.7 percent to $6.39 a bushel on the Chicago Board of Trade by 11:43 a.m. in London. The most-traded contract is set for a 4.5 percent gain this week, the biggest weekly advance since the week to Dec. 23. Futures rose 2 percent last week.

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