Soybeans, Corn Rise as Oil Rally Boosts Biofuel Demand Prospect

By Jae Hur

Aug. 18 (Bloomberg) -- Soybeans gained for the first time in three days and corn rallied as crude oil rebounded, boosting the demand prospect for alternative fuel made from the two crops. Wheat also advanced.

Soybeans and corn reached records this year as demand for biofuel surged following record energy costs. Crude oil rose for the first day in three as a storm near Cuba prompted evacuations from rigs and production platforms in the Gulf of Mexico.

``A rally in crude oil prices provided support for soybeans and corn today,'' Daisuke Yamaguchi, an analyst at futures broker Yutaka Shoji Co. in Tokyo, said today. He also attributed the gains to a technical rebound after the grain complex plunged on the dollar's strength last week.

Soybeans for November delivery rose as much as 39.75 cents, or 3.3 percent, to $12.5875 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $12.55 as of 10:01 a.m. in Singapore. The price gained 3.3 percent last week, after falling for five straight weeks. The most-active contract has lost 23 percent since reaching a record $16.3675 on July 3.

The oilseed price fell as much as the 70-cent daily limit on Aug. 15 before closing down 4.3 percent at $12.19 as the dollar jumped against the euro and on speculation Chinese buyers may cancel earlier purchases of the oilseed and of vegetable oil because of low domestic prices.

Corn for December delivery advanced as much as 18 cents, or 3.3 percent, to $5.675 a bushel and last traded at $5.655 as of 10:10 a.m. in Singapore. The contract lost as much as the 30- cent daily limit on Aug. 15 before settling down 4.8 percent at $5.495.

Corn prices rose 6 percent last week, the first gain since the end of June. Futures gave fallen 29 percent from reaching a record $7.9925 on June 27.

Crude oil for September delivery rose as much as 1 percent to $114.93 a barrel on the New York Mercantile Exchange, while the dollar retreated from the strongest level in almost six months versus the euro.

Wheat for December delivery advanced as much as 18.75 cents, or 2.2 percent, to $8.68 a bushel and stood at $8.6475 as of 10:09 a.m. Singapore time. The contract fell 4.5 percent on Aug. 15 and have lost 36 percent since reaching a record $13.495 on Feb. 27.

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