Corn, Soybeans Drop After Oil Falls, Eroding Demand Prospects

By Jae Hur

Sept. 25 (Bloomberg) -- Corn fell for the first time in five days and soybeans slumped after a decline in crude oil prices reduced the appeal of the crops as a source of alternative fuel. Wheat also dropped.

Oil lost 3.3 percent the past two days as a government report yesterday showed U.S. fuel demand fell last week to the lowest in almost five years. Corn has declined 30 percent from its June record and soybeans have lost 28 percent from an all- time high in July.

``Lower energy costs depressed corn and soybeans,'' Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo, said today by phone.

Corn for December delivery lost as much as 8 cents, or 1.4 percent, to $5.55 a bushel in after-hours trading on the Chicago Board of Trade. It was at $5.60 at 3:28 p.m. Singapore time. Futures rose to a record $7.9925 June 27.

Soybeans for November delivery fell as much as 18.75 cents, or 1.6 percent, to $11.6825 a bushel and last traded at $11.8325. The oilseed reached a record $16.3675 on July 3.

Grain prices fell this month as investors sold commodities on concerns about slowing world growth. Prices also fell as the dollar climbed from an all-time low against the euro in July, reducing the appeal of commodities priced in the U.S. currency.

Crude oil for November delivery was up 0.4 percent at $106.11 a barrel on the New York Mercantile Exchange after falling 0.8 percent yesterday.

The dollar dropped as much as 1 percent to $1.4768 per euro and was last at $1.4729. The currency touched $1.4866 on Sept. 22, the weakest since Aug. 22.

Wheat for December delivery dropped as much as 10.25 cents, or 1.4 percent, to $7.20 a bushel and last traded at $7.295. The contract fell 2.7 percent yesterday as planting in the U.S. progresses and on speculation global production will increase to a record this season. Futures have lost 46 percent from a record $13.495 on Feb. 27.

In the export market, Egypt is seeking at least 55,000 metric tons of wheat at a tender today.

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