Corn Rises First Day in Six as Steep Declines Seen Excessive

By Sungwoo Park and Jae Hur

July 24 (Bloomberg) -- Corn climbed for the first time in six days on speculation recent price declines were excessive amid expectations of strong demand for animal feed and biofuel. Wheat and soybeans also rose.

Corn futures yesterday fell as much as 5 percent as a stronger dollar and declining crude oil reduced its appeal as a hedge against inflation. Corn's 14-day relative strength index, a gauge of momentum, has held below 30 since July 21, signaling prices may rise. Corn had fallen 25 percent from a record last month and soybeans had slipped 15 percent from the highest ever.

``This is rather a technical rebound or a correction after sharp declines in previous sessions,'' Andy Lee, a manager of international business team of Tong Yang Futures Trading Co. in Seoul, said today by phone.

Corn for December delivery rose as much as 12.75 cents, or 2.2 percent, to $6.0325 a bushel in after-hours trading on the Chicago Board of Trade and traded at $5.99 as of 3:39 p.m. Singapore time. Corn dropped yesterday as low as $5.6275, the lowest since April 1.

Soybeans for November delivery gained as much as 13.5 cents, or 1 percent, to $13.975 a bushel and stood at $13.95. The futures yesterday fell as much as 3.3 percent to $13.625, the lowest since June 4. They touched a record $16.3675 on July 3.

``Near-term weakness aside, however, we retain our positive bias on corn and soybeans as a compelling backdrop of Chinese demand, rising protein and meat demand and biofuels should support prices,'' Barclays Capital said in a July 17 report.

Export Sales

Export market news was supportive, with the U.S. reporting sales of 244,696 metric tons of corn to Japan and 120,000 tons of soybeans to unidentified destinations for delivery in the marketing year that begins Sept. 1, the Department of Agriculture said yesterday.

Wheat for September delivery added 8 cents, or 1 percent, to $7.9125 a bushel. Prices have slumped 41 percent from a record $13.495 on Feb. 27 as higher prices spurred farmers to plant more.

The gains came even as the dollar traded near a one-month high against the yen after U.S. lawmakers approved a bill that allows a government bail out of Fannie Mae and Freddie Mac. The currency was also near a two-week high against the euro rallying financial stocks fuelled expectations the Federal Reserve will raise rates.

The dollar traded at 107.79 Tokyo and $1.5682 against the euro.

Crude oil for September delivery rose 0.3 percent, to $124.86 a barrel at 3:43 p.m. Singapore time on the New York Mercantile Exchange. Futures fell as much as 3 percent yesterday before settling at $124.44 a barrel, the lowest since June 5.

To contact the reporters responsible for this story: Sungwoo Park at spark47@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net