Corn Gains for Second Day as Ike May Damage, Delay Crop Harvest

By Jae Hur

Sept. 15 (Bloomberg) -- Corn advanced for a second day on speculation excessive rains and winds from Hurricane Ike may damage and delay harvesting of the U.S. crop. Soybeans declined, while wheat rallied.

Ike, which left Houston without drinking water and severed power to millions, weakened to a tropical depression as it moved inland over Missouri and Illinois. U.S. farmers will harvest 1.8 percent less corn than forecast last month, the Department of Agriculture said Sept. 12 in a report.

``Any weather that's too extreme is going to affect the corn crop adversely,'' said John Reeve, associate director for agricultural commodities at UBS AG in Singapore. Excessive ``wind could be damaging and it could delay harvest,'' he said.

Corn for December delivery added as much as 1.6 percent to $5.72 a bushel in after-hours trading on the Chicago Board of Trade and was at $5.675 by 2:25 p.m. Singapore time. Futures, which rose 2.7 percent last week, have fallen 29 percent from a record $7.9925 on June 27.

The contract jumped by the 30-cent daily maximum on Sept. 12 after the USDA said production will total 12.072 billion bushels, down from 12.288 billion projected last month. The average estimate of 24 analysts surveyed by Bloomberg News was for 12.126 billion bushels.

The soybean crop estimate of 2.934 billion bushels was lower than the 2.973 billion the USDA projected in August and the 2.955 billion forecast by analysts on average.

Cash Corn

The USDA pegged average cash corn prices in the year that began Sept. 1 at $5.50 a bushel, compared with $5.40 estimated in August and $4.20 in the most recent year. Cash soybean prices will average $12.35 a bushel in the crop year that began Sept. 1, up from last month's estimate of $12.25 and up from $10.15 in the previous year, the USDA said.

``Friday's USDA report gave corn prices a real shot in the arm and also boosted soybeans to a lesser extent,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. ``The dip in the U.S. dollar should encourage a broad-based bounce in commodities prices.''

Soybeans for November delivery lost 0.6 percent to $11.9475 a bushel as of 2:25 p.m. Singapore time after trading in $11.88- $12.10 band. Futures, which gained 2.1 percent last week, have slid 27 percent from a record $16.3675 on July 3.

The dollar fell as much as 1.8 percent to $1.4481 per euro and stood at $1.4371 by 2:29 p.m. Singapore time. Crude oil for October delivery dropped as much as 2.7 percent to $98.46 a barrel, the lowest since Feb. 26, before trading at $99.10.

Wheat for December delivery advanced as much as 9.5 cents, or 1.3 percent, to $7.2875 a bushel and last traded at $7.2575. Futures, which lost 4.3 percent last week, have fallen 46 percent from a record $13.495 set on Feb. 27.

About 574 million bushels will be in storage in the year to May 31, and exports will total 1 billion bushels, matching the forecasts made in August, the USDA said Sept. 12. Analysts surveyed by Bloomberg News expected inventories of 556 million bushels and more exports.

``The upside risks to wheat prices will continue to be limited by the prospect of bumper 2008 world production,'' Hassall said.

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