Soybeans, Corn Slump as Dollar's Advance Dents Demand Outlook

By Jae Hur

Sept. 5 (Bloomberg) -- Soybeans tumbled for the fourth straight session to a three-week low and corn slumped as the dollar advanced against the euro, reducing the appeal of U.S. supplies to overseas buyers.

Before today the oilseed lost 6.7 percent this week, heading for the second weekly drop. The dollar jumped to the highest level today since October against the euro on signs Europe's economy is slowing. The U.S. currency's decline earlier this year helped push soybeans, corn, crude oil and gold to records.

``The dollar's strength is the key factor which put pressure on grains and other commodities as well as stocks,'' said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. ``Eventually, grains will recover because of their strong fundamentals, but at the moment they are following the overall bearish mood in the broad financial market.''

Soybeans for November delivery declined as much as 30.5 cents, or 2.5 percent, to $12.045 a bushel, the lowest since Aug. 15, in after-hours electronic trading on the Chicago Board of Trade, and stood at $12.145 as of 3:24 p.m. Singapore time. Futures have slid 26 percent from a record $16.3675 on July 3.

Corn for December delivery fell as much as 10 cents, or 1.8 percent, to $5.545 a bushel and traded at $5.5475 as of 3:24 p.m. Singapore time. The price has fallen 31 percent from a record $7.9925 on June 27.

``Wheat and Soybeans are under pressure from crop improvements and a much stronger dollar,'' said John Reeve, associate director for agricultural commodities at UBS AG in Singapore. ``Corn is now finding support from ethanol and stock feed users.''

Equities Decline

The euro dropped as much as 0.8 percent to $1.4214 against the U.S. dollar, the lowest since Oct. 24. The European currency has fallen for seven straight days. Gold earlier declined for six straight days and crude oil this week dipped to a five-month low.

Asian stocks fell for a fifth day, extending a global rout, after rising U.S. jobless claims deepened concern a global economic slowdown is cutting demand for the region's exports. U.S. stocks tumbled, sending the Standard & Poor's 500 Index down 3 percent for the longest stretch of losses since January.

``A lot of liquidation has been seen in the market with talk of the close of some hedge funds and concerns about slowing demand following an economic slowdown in the U.S., Europe and Japan,'' Kikukawa said.

Wheat Drops

Wheat for December delivery dropped as much as 16.5 cents, or 2.1 percent, to $7.605 a bushel, and traded at $7.625 as of 3:29 p.m. Singapore time. Futures have fallen 44 percent from a record $13.495 on Feb. 27 after farmers globally increased acreage to take advantage of a 77 percent price rally in 2007.

Australia may produce less of the grain than forecast because of dry weather, JPMorgan Chase & Co. said. Output may be 22.2 million metric tons, down from a previous forecast of 23.7 million tons, JPMorgan analysts led by Stuart Jackson said in a report yesterday.

The government's commodities forecaster predicted a crop of 23.7 million tons in June, up from last year's 13 million tons. Australia is forecast to be the world's third-largest wheat exporter in the year that began June 1, according to the U.S. Department of Agriculture.

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