Corn, Soybeans Drop as Warm Weather May Boost U.S. Production

By Sungwoo Park and Jae Hur

Aug. 11 (Bloomberg) -- Corn and soybeans fell to the lowest in more than four months on speculation the U.S. crops probably avoided the flood damage investors estimated in June as warm weather dried out fields, raising production prospects.

The U.S. Department of Agriculture will tomorrow project a corn crop of 11.939 billion bushels, according to the average estimate of 23 analysts surveyed by Bloomberg News. That's up 1.9 percent from the USDA's July estimate of 11.715 bushels. Since reaching records this year, corn is down 35 percent and soybeans are down 28 percent as favorable weather boosted crops.

``Many are expecting the USDA report to turn out to be a bearish factor for corn price because good weather improved crop condition in the wake of June flooding,'' Han Sung Min, a manager at the international marketing division of Korea Exchange Bank Futures Co. said from Seoul. ``In addition, grains remain pressured by the stronger dollar.''

Corn for December delivery fell as much as 6.25 cents, or 1.2 percent, to $5.12 a bushel, the lowest since March 20, on the Chicago Board of Trade and traded at $5.1575 at 3:51 p.m. Singapore time.

Futures dropped 11.4 percent last week, the biggest such decline since July 1996. The decline was the sixth straight weekly loss. Corn has fallen from a record $7.9925 on June 27.

The dollar rose last Friday to the highest since February against a basket of the euro, yen and four other major currencies, reducing the appeal of commodities as a hedge against inflation.

Soybeans Drop

Soybeans for November delivery lost as much as 12.5 cents, or 1.1 percent, to $11.68 a bushel, the lowest since April 1, and last traded at $11.7125. The most-active contract is down from the all-time high of $16.3675 on July 3. Soybeans tumbled 13.5 percent last week, the biggest such drop since July 1988.

The USDA will issue its crop report tomorrow at 8:30 a.m. in Washington.

Wheat for December delivery was little changed at $7.91 a bushel as of 4:02 p.m. Singapore time after trading between $7.87 and $8.01. The most-active futures have dropped 41 percent since reaching a record $13.495 on Feb. 27.

Australia may harvest more of wheat crop than previously forecast after July rainfall, the Grain Growers Association said. Production may be 24.05 million metric tons, the group said, citing the latest forecast from the Australian Crop Forecasters. That's 500,000 tons higher than ACF's previous estimate, it said, and compares with the government forecast of 23.7 million tons.

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