Corn, Soybeans Fall as Lehman Bankruptcy May Signal Slowdown

By Jeff Wilson

Sept. 15 (Bloomberg) -- Corn and soybeans may fall in Chicago as the bankruptcy filing by Lehman Brothers Holdings Inc., the biggest in history, increased speculation that a global economic slowdown will reduce demand for food, feed and fuel.

U.S. equity-index futures and stocks in Asia and Europe fell after Lehman's filing and Bank of America Corp. agreed to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for $50 billion in an emergency deal. Corn futures have fallen 31 percent from a record in June and soybeans are down 29 percent since rising to an all-time high in July.

``You have a liquidity crisis and people are getting out of positions,'' said Roy Huckabay, an executive vice president of the Linn Group in Chicago. ``This crisis is spreading overseas, and people are getting very concerned about foreign demand'' for food, livestock feed and alternative fuels made from corn and soybeans, the two biggest U.S. crops, Huckabay said.

Corn futures for December delivery fell 12.75 cents, or 2.3 percent, to $5.505 a bushel overnight on the Chicago Board of Trade. A close at that price would be the biggest drop since Sept. 5. Corn jumped the CBOT's 30-cent daily limit on Sept. 12, when the government cut its forecast for this year's U.S. crop. The most-active futures rose to a record $7.9925 on June 27.

Soybean futures for November delivery fell 34.75 cents, or 2.9 percent, to $11.6725 a bushel overnight in Chicago. A close at that price would be the biggest drop since Sept. 5. The most- active futures touched a record $16.3675 on July 3.

Crude oil in New York tumbled 7 percent to a seven-month low earlier today, after refineries along the Gulf of Mexico escaped damage from Hurricane Ike over the weekend. Commodities, as measured by the Standard & Poor's GSCI Index of 24 raw- material futures, fell as much as 5.3 percent to the lowest since Feb. 8. The index is down 31 percent from a record in July.

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, with soybeans in second place at $26.8 billion, government figures show. Wheat is the fourth-biggest crop, behind hay, with a value of $13.7 billion.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net