Corn, Soybeans Dip as Dollar Gain Reduces Appeal for U.S. Crops

By Jae Hur

Sept. 29 (Bloomberg) -- Corn and soybeans fell for a third day as the dollar rose to a one-week high against the euro on a U.S. government-led $700 billion financial rescue package, reducing demand for U.S. supplies.

President George W. Bush and congressional leaders said they reached an agreement on the bank-rescue plan designed to revive moribund credit markets. Corn has lost 34 percent from its record in June and soybeans have fallen 31 percent from a peak in July.

``The imminent passing of the U.S. rescue package is boosting the dollar and this is contributing to the weakness in grains prices today,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney.

Corn for December delivery fell as much as 13 cents, or 2.4 percent, to $5.30 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $5.31 by 2:21 p.m. Singapore time.

Soybeans for November delivery lost as much as 28.5 cents, or 2.5 percent, to $11.355 a bushel and last traded at $11.37 by 2:21 p.m. Singapore time. Corn declined 2.7 percent and soybeans fell 1.6 percent Sept. 26 as the U.S. economy slowed, signaling reduced demand for grain and oilseeds.

The U.S. economy's expansion rate of 2.8 percent was less than an estimate of 3.3 percent last month, Commerce Department data showed Sept. 26. Personal consumption, trade and business investment contributed less to the gross domestic product than the prior estimate.

Washington Mutual was the latest casualty in a financial crisis that caused investment bank Lehman Brothers Holdings Inc. to fail and led to rescues of Merrill Lynch & Co. and Bear Stearns Cos.

Freight Index

``Although the bank rescue plan may go some way to allaying fears of a collapse in the U.S. economy, Friday's weak GDP number along with a collapsing Baltic Dry Index are indications that commodity demand prospects are not strong,'' Hassall said.

The Baltic Dry Index, a measure of shipping costs for commodities, declined the most on record amid a pricing dispute over iron ore between Chinese steelmakers and Brazil's Cia. Vale do Rio Doce. The index lost 10 percent to 3,746 points Sept. 26, according to the Baltic Exchange in London. The gauge has fallen 45 percent this month to its lowest since August 2006.

Wheat for December delivery dropped as much as 1.7 percent to $7.04 a bushel and traded at $7.065 by 2:25 p.m. in Singapore. The contract was down 0.3 percent last week, the fifth straight weekly decline. Futures have fallen 48 percent from a record $13.495 on Feb. 27.

``Favorable weather for wheat planting continues,'' Mike Tannura, a meteorologist for T-Storm weather, said yesterday in an e-mailed note. ``Next week should not bee too wet. Weekend rain in Argentina was helpful for some wheat, but more is needed with not much foreseen.''

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