Corn, Soybeans Drop For Second Day on AIG Woes, Lehman Collapse

By Jae Hur

Sept. 16 (Bloomberg) -- Corn and soybeans fell for a second day amid concern the ratings downgrade of American International Group Inc. will worsen turmoil that led to the collapse of Lehman Brothers Holdings Inc. and reduce demand for food and fuel.

Corn for December delivery lost as much as 2.1 percent and soybeans for fell 1.7 percent in after-hours electronic trading in Chicago. Oil tumbled below $92 a barrel to a seven-month low, reducing the appeal for grains as a source of biofuels. Asian stocks plunged the most in eight months and the dollar fell the most since July 16.

``Like other commodities, grains are capped by growing concern over the financial market,'' said Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. ``That has prompted investors to take money out from risk assets and fundamentals will play only after this concern calms down.''

AIG plunged 61 percent yesterday in New York, part of the biggest tumble in U.S. stocks since Sept. 11 terrorist attacks. The UBS-Bloomberg Constant Maturity Commodity Index of 26 raw materials fell as much as 3.2 percent yesterday to the lowest since Jan. 28 after Lehman sought court protection and Bank of America Corp. agreed to buy Merrill Lynch & Co., the world's biggest brokerage firm, for about $50 billion in shares.

Corn futures lost as much as 12.25 cents to $5.4975 a bushel and was at $5.505 at 1:26 p.m. Singapore time. Futures have fallen 31 percent from a record $7.9925 on June 27.

Soybeans for November delivery traded at $11.53. The futures, which declined 1.9 percent yesterday, have slid 30 percent from a peak $16.3675 on July 3.

Crude for October delivery declined as much as 4.3 percent to $91.56 a barrel, the lowest since Feb. 11, and was at $91.65.

Wheat for December delivery dropped 0.7 percent to $7.19 a bushel by 1:29 p.m. Singapore time. Futures have fallen 47 percent from a record $13.495 set on Feb. 27.

Australia, the world's sixth-largest wheat exporter, may harvest 5 percent less of the grain than forecast because of dry weather. Production may be 22.5 million tons, the Australian Bureau of Agricultural and Resource Economics said today. That compares with its June forecast of 23.7 million tons and last year's drought-reduced crop of 13 million tons.

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