By Jae Hur
July 8 (Bloomberg) -- Corn and soybeans fell after grains drove the biggest decline in commodities in more than three months yesterday as drier and warmer weather improved the condition of crops in the U.S. Midwest.
Corn dropped as much as 2.7 percent and soybeans 1.4 percent after tumbling the maximum allowed yesterday when the Reuters/Jefferies CRB Index lost 2.8 percent, the largest decline since March 19. Zinc fell while gold was little changed after sliding 2 percent in the previous three days.
``Supply concerns and speculation have been pushing commodities to records this year,'' Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today from Tokyo. ``The question is whether there is still buying interest or real demand at these record price levels.''
Corn for December delivery fell 18.5 cents, or 2.5 percent, to $7.285 a bushel at 11:36 a.m. Singapore time after touching $7.265 in after-hours trading on the Chicago Board of Trade.
Soybeans for November delivery dropped 15.25 cents, or 1 percent, to $15.4575 a bushel after dipping to $15.40, while wheat for September delivery added 0.2 percent to $8.3775 a bushel after losing 5.8 percent yesterday. Cotton plunged by the daily limit yesterday and copper, cocoa and coffee also dropped as supply concerns dwindled.
Corn surged 26 percent last month and soybeans jumped 15 percent as the worst Midwest floods since 1993 ravaged Missouri, Indiana, the eastern half of Iowa and south-central Illinois. Oil climbed to a record $145.85 a barrel on July 3 amid heightened speculation that a conflict between Israel and Iran would disrupt Middle East petroleum shipments.
Index Declines
Seventeen of the 19 commodities in the CRB Index declined yesterday. The gauge climbed to a record 473.97 on July 3.
Crude oil for August delivery added 0.4 percent to $141.95 a barrel at 12:02 p.m. in Singapore, after falling as much as 4 percent yesterday as the dollar rose amid speculation leaders from the Group of Eight industrialized nations may address high energy prices and signal support for the currency.
The dollar rose against the euro today on speculation Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will reiterate their support for a strong currency.
Bernanke speaks on financial regulation and stability at a forum in Arlington, Virginia today. Bernanke said on June 3 that he's ``attentive'' to the effect of the dollar's decline on inflation. Paulson and Bernanke are scheduled to testify before Congress on July 10.
`Accelerate Gains'
``U.S. officials' comments may accelerate gains in the dollar,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``We can't rule out the possibility that Bernanke will be hawkish on inflation and Paulson will be supportive of the dollar.''
The euro may average $1.50 in the fourth quarter, according to the median of 38 analysts surveyed by Bloomberg. The euro fell to $1.5704 today.
Aluminum prices fell after touching a record above $3,300 a ton in London as a power shortage forced smelters in the north of China, the world's largest producer of the metal, to cut output.
Investments linked to commodity markets totaled $235 billion through mid-April, according to Lehman Brothers Holdings Inc. The pace of investment will slow as the dollar rebounds through the end of the year, according to William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey.
Investors should be ``cautious'' on commodities following the ``significant rise'' in raw materials in the first half of the year, Andrew Popper, the chief investment officer at SG Hambros in London, said yesterday in an interview on Bloomberg Television. He helps manage about $13.7 billion.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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