GRAINS-Soy posts one-month low on S.America prospects; corn firm

* Rains in Argentina expected to bolster corn, soy crops
    * Soymeal demand seen slowing as U.S. DDG prices tumble
    * Corn higher as traders exit long soy/short corn spreads
    * Wheat falls to contract lows below $6 a bushel

    By Julie Ingwersen
    CHICAGO, Jan 2 (Reuters) - U.S. soybeans fell to a one-month
low on Thursday on a mix of technical selling, prospects for
large South American crops and weakness in soymeal values,
traders said.
    Corn firmed on short covering and spreading against soybeans
but wheat sagged under the weight of plentiful global supplies,
with values on the Chicago Board of Trade setting life-of-contract lows. At the CBOT as of 11:02 a.m. CST (1702 GMT), most-active March soybeans were down 19 cents at $12.73-1/2 per bushel. March corn was up 1-1/4 cents at $4.23-1/4 a bushel and March wheat was down 8-1/2 cents at $5.96-3/4 a bushel. Soybeans declined as rains fell in parts of Argentina, where soy and corn crops have been in need of moisture. In Brazil, the harvest of a likely record-large soybean crop is under way in a few areas. "Argentina overnight and early this morning had some very timely showers, and that is the thing pressing the soybean market. They are taking the weather premium out," said Don Roose, president of U.S. Commodities. Argentina will need more rain in the coming weeks, said Joel Widenor, a meteorologist with the Commodity Weather Group. "There was at least three-quarters of the Argentine corn/soy (region) that picked up mostly 0.5 to 1.5 inch (1.3 to 3.8 cm) in the past week. This was enough to limit concern to less than one-quarter of the corn for the near-term, but more rain is needed at mid-month," Widenor told the Reuters Global Ags Forum.
"Most of the concern this month will be for corn pollination. Soy will not reach key stages until February," Widenor said. Also, commodity funds are net short in corn and net long in soybeans, and Roose said they appeared to be unwinding long corn/short soybean spread positions as the new year begins. CBOT corn fell 40 percent in 2013, the biggest loser among major commodities, while soybeans fell 7.5 percent on the year. Soymeal futures fell the most by percentage on Thursday in the CBOT soy complex on worries of a slowdown in demand, given a sharp fall in prices for dried distillers' grains (DDGs), a competing feed ingredient made from corn. U.S. cash prices for DDGs have tumbled in the last two weeks since China rejected some cargoes of U.S. DDGs due to an unapproved genetically modified strain of corn. Traders are concerned that a drop in Chinese demand for DDGs will cause a backlog of U.S. supplies, further depressing prices and threatening to replace soymeal in feed rations. "I think the trade is surprised at how hard DDG prices have fallen and how delicious DDGs look compared to soymeal," said Rich Nelson, analyst with Allendale Inc.
WHEAT CBOT wheat fell to contract lows below $6 a bushel, with the front month falling to a 19-month bottom, on ample global wheat supplies and a lack of export demand. "When are we going to find buyers? That's the main question," Nelson said. CBOT wheat lost 22 percent in 2013, its biggest annual loss in five years. A cold snap is forecast for the central United States early next week, with temperatures dropping below zero degrees F (minus 18 Celsius), but the threat of winterkill should be limited to hard red winter crops in parts of northern Kansas and eastern Nebraska, forecasters said. The core of the cold on Monday and Tuesday will be in the Midwest, but a thick blanket of insulating snow should protect the dormant soft red winter wheat crop there. Prices at 11:02 a.m. CST (1702 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 423.50 1.50 0.4% 0.4% CBOT soy 1273.75 -18.75 -1.5% -3.0% CBOT meal 408.00 -9.00 -2.2% -6.8% CBOT soyoil 38.93 -0.20 -0.5% 0.3% CBOT wheat 597.25 -8.00 -1.3% -1.3% CBOT rice 1568.00 17.00 1.1% 1.1% EU wheat 208.75 -0.25 -0.1% -0.1% US crude 96.45 -1.97 -2.0% -2.0% Dow Jones 16,454 -122 -0.7% -0.7% Gold 1225.10 19.81 1.6% 1.6% Euro/dollar 1.3670 -0.0082 -0.6% 0.1% Dollar Index 80.5330 0.4980 0.6% 0.6% Baltic Freight 2113 -164 -7.2% -7.2% (Editing by Matthew Lewis)

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