Corn, Soybeans Decline as Price Gains Slow U.S. Export Sales

By Jae Hur

Aug. 28 (Bloomberg) -- Corn and soybeans declined in Chicago as recent gains reduced demand for U.S. supplies and prompted some investors to unwind their bets ahead of a three-day weekend.

Corn rose 15 percent from Aug. 8 to yesterday's close and soybeans gained 14 percent. Inspections of U.S. corn for export for the week ending Aug. 21 fell 17 percent from a year earlier and soybean inspections dropped 43 percent, the U.S. Department of Agriculture said Aug. 25.

``We are seeing position-squaring ahead of the long U.S. weekend,'' said Daisuke Yamaguchi, an analyst at futures broker Yutaka Shoji Co. ``It's also a technical adjustment after the rallies in the past several weeks from their recent dips and amid a lack of fresh fundamental developments.''

Corn for December delivery was down 2 cents, or 0.3 percent, at $5.94 a bushel in after-hours electronic trading on the Chicago Board of Trade at 4:04 p.m. Singapore time. The price fell 26 percent from a record $7.9925 on June 27. The Chicago market will be closed on Sept. 1 for the Labor Day holiday.

The dollar fell as much as 0.5 percent, extending its drop for a second day after reaching a six-month high against the euro. Crude oil rose for a fourth day on speculation Tropical Storm Gustav will be the most damaging since Hurricane Katrina as it moves toward production platforms in the Gulf of Mexico.

``With the dollar appearing fairly range-bound in the near term, corn is under mixed influences from outside markets with recent weakness in wheat prices weighing on prices, while strength in crude is price-supportive,'' Toby Hassall, an analyst with Commodity Warrants Australia, said in an e-mailed note today.

Soybeans Drop

Soybeans for November delivery lost 0.75 cent to $13.4725 a bushel at 4:07 p.m. Singapore time after trading between $13.395 and $13.49. Futures declined 18 percent from a record $16.3675 on July 3.

``The action in soybeans is closely mirroring that in the corn market,'' Hassall said. ``Moving forward, the reaction of oil prices to the threat of Tropical Storm/Hurricane Gustav will likely have flow-on effects for the grains markets.''

Argentina will continue to restrict agricultural exports to protect domestic food supplies and keep prices in check, said Ricardo Echegaray, head of the government unit that regulates the sale of grains and livestock.

Policies to limit grain and beef exports were designed to ensure a ``responsible flow'' of farm products to export markets while making sure enough food is available for Argentines, Echegaray said yesterday. Argentina was the world's second- largest corn exporter and the third-largest in soybeans last year, according to USDA data.

Wheat for December delivery added 1.25 cents to $8.27 a bushel at 4:09 p.m. Singapore time after dipping to $8.20. The contract has plunged 39 percent from a record $13.495 on Feb. 27.

Taiwan plans to buy 40,000 metric tons of U.S. milling wheat tomorrow and Bangladesh has been seeking 100,000 tons of wheat for October delivery.

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