Corn, Soybeans Advance as Dollar's Gain Stalls, Crude Oil Rises

By Jae Hur

Aug. 27 (Bloomberg) -- Corn and soybeans rallied as a drop in the dollar boosted the appeal of U.S. supplies for overseas importers and rising energy costs increased demand prospects for biofuel. Wheat gained for the first time in four days.

The dollar declined against the euro after rising as much as 1.2 percent yesterday to $1.4571, the strongest since Feb. 14. A stronger U.S. currency erodes the purchasing power of overseas buyers. Crude oil climbed as much as 0.6 percent after rising 1 percent yesterday.

``The halt of the dollar's advance and rising crude oil prices helped grains and other commodities rebound,'' Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank, said today from Seoul. ``For corn, it's also a technical correction after declining in the past three days.''

Corn for December delivery advanced as much as 10.5 cents, or 1.8 percent, to $6.045 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $5.995 as of 10:51 a.m. in Singapore. The price has risen 70 percent in the past 12 months, reaching a record $7.9925 on June 27.

Soybeans for November delivery added as much as 23.75 cents, or 1.8 percent, to $13.6825 a bushel and was at $13.61 as of 10:52 a.m. in Singapore. Futures have gained 59 percent in the past year, reaching a record $16.3675 on July 3.

Soybean production in Argentina and Brazil, which account for more than half the world's output of the oilseed, may be hurt this year by dry weather and a campaign to end farming on deforested Amazon land, a forecaster said.

Argentina Drought

Parts of Argentina are facing the worst drought in 40 years, Thomas Mielke, an analyst at Oil World, a Hamburg-based forecaster, said yesterday. Planting in Brazil may be little changed as the government cuts aid to farmers who can't prove that their land was obtained legally.

Reduced output in South America combined with a dry spell that is threatening crops in the U.S., the world's largest soybean grower, could drive global prices of the oilseed higher, said Mielke.

Wheat for December delivery was up 4.75 cents, or 0.6 percent, at $8.5925 a bushel as of 10:54 a.m. Singapore time after trading between $8.52 and $8.6275. The contract has gained 19 percent in the past year, reaching a record $13.495 on Feb. 27.

Farmers in Argentina, the fourth-largest wheat exporter last year, may harvest 20 percent less wheat this year because of drought and a conflict over taxes, the Buenos Aires Cereals Exchange said.

The crop may total 12.5 million metric tons, down from 15.6 million tons a year earlier, Eduardo Anchubidart, head of the exchange's forecasting department, said yesterday. The crop is harvested starting in December.

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