Soybeans Rally as Recent Drops Seen Excessive; Corn Gains

By Jae Hur

July 18 (Bloomberg) -- Soybeans rose after dropping the most in more than a week yesterday as investors bet declines this week don't reflect the tight supply outlook. Corn gained after falling the most in six months.

Soybeans yesterday lost 3.2 percent after legislators in Argentina, the third-biggest exporter of the oilseed, rejected an export tax that had curbed shipments. Corn fell 4 percent yesterday, the biggest drop since Jan. 23. Before today, crude oil had plunged 11 percent this week, reducing the demand prospects for biofuel made from corn and soybeans.

``Yesterday's price declines were too excessive,'' said Daisuke Yamaguchi, an analyst at futures broker Yutaka Shoji Co. in Tokyo. The market was also supported by forecast for hot, dry weather in parts of the U.S. Midwest later next week, he said.

Soybeans for November delivery rose as much as 11 cents, or 0.7 percent, to $15.09 a bushel in after-hours trading on the Chicago Board of Trade. It was at $15.065 at 12:35 p.m. Singapore time.

Before today, the contract lost 6.1 percent this week and is still headed for the biggest weekly decline since March 21. Futures have plunged 8 percent since reaching a record $16.3675 on July 3. The price is still up 77 percent in the past year on increasing global demand.

Argentine Vice President Julio Cobos yesterday voted against higher levies to break a tie in the Senate, giving farmers a victory in their four-month campaign to repeal export taxes imposed in March. The decision may revive shipments stalled by farmers who blocked grain trucks from reaching ports.

Buying Interest

``Despite the news from Argentina, the fundamental supply and demand outlook for soybeans remains supportive and the sharp break in prices last night may encourage some buyers back into the market,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail.

Corn for December delivery, the most active maturity, added as much as 6.25 cents, or 1 percent, to $6.5625 a bushel and traded at $6.4875 at 12:35 p.m. Singapore time. Before today, the contract lost 8.4 percent this week, declining for a third straight week.

Futures are down 19 percent since reaching a record $7.9925 on June 27. Still, prices have gained 90 percent in the past year on demand for livestock feed and grain-based ethanol.

Crude oil rose for the first time in four days in New York as U.S. stocks ended a two-day rally, prompting some investors to buy commodities. Oil is still poised for a record weekly slump in dollar terms after losing more than $14 a barrel since July 11.

``If crude prices can arrest the sharp declines of the past three sessions then we may see some buyers return to the corn market,'' Hassall said. ``Wheat prices fell in sympathy with corn.''

Wheat for September delivery rose 3.5 cents, or 0.4 percent, to $8.1250 a bushel at 12:35 p.m. in Singapore after losing 2.9 percent yesterday. Prices have fallen 40 percent from a record $13.495 on Feb. 27 as higher prices spurred farmers to plant more.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net