Soybeans Gain on Tight U.S. Supplies; Corn Dips as Oil Declines

By Jae Hur

Sept. 26 (Bloomberg) -- Soybeans climbed amid tight supplies and corn slumped for a second day as crude oil declined, eroding demand prospects for the grain as a source of biofuel.

On Sept. 1, reserve soybean supplies from last year's harvest totaled 3.81 million metric tons (140 million bushels), 76 percent below the year-earlier level, the Department of Agriculture said Sept. 12. The inventory amounted to just 7.5 percent of estimated use for the previous 12 months of 51 million tons, the lowest ratio since 1973, according to USDA statistics.

``Soybean supplies remain very tight before this year's harvest,'' Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said from Tokyo.

Soybeans for November delivery added as much as 1 percent to $11.95 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $11.9325 by 12:30 p.m. Singapore time. Still, the price is down 27 percent from a July peak of $16.3675.

Processors including Archer Daniels Midland Co. converted 3.86 million short tons of soybeans into vegetable oil and animal feed in August, the U.S. Census Bureau said yesterday. That's down 12 percent from 4.388 million tons a year earlier and from 4.18 million in July. The average estimate of five analysts surveyed by Bloomberg was for 3.842 million tons.

Corn for December delivery traded little changed at $5.58 a bushel by 12:36 p.m. Singapore time after touching $5.5225. The futures have lost 30 percent from a record $7.9925 June 27.

Exports Fall

Corn and soybeans declined yesterday on speculation that a slowing U.S. economy will reduce demand and overseas buyers may increase purchases of cheaper feed wheat, mostly from Russia and Europe, to replace the grain and soybean meal in animal feed.

Corn sales last week by U.S. exporters fell 68 percent to 547,796 metric tons from a year earlier, the USDA said yesterday.

Global trade in corn will decline 13 percent to 87 million metric tons in the year that began July 1, compared with a year earlier, the International Grain Council said yesterday. That was down from an August forecast of 88 million tons.

Prices were also pushed lower by crude oil, which declined as much as 1.3 percent to $106.91 a barrel on the New York Mercantile Exchange after gaining 2.2 percent yesterday.

Wheat for December delivery dropped as much as 1.2 percent to $7.2775 a bushel and last traded at $7.34. Futures have fallen 46 percent from a record $13.495 on Feb. 27.

The contract climbed 0.8 percent yesterday amid speculation growers in the U.S., the largest exporter, will plant fewer acres with winter varieties as prices fall and input costs rise.

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