Soybeans Rise on Speculation Shipping Cost Drop May Spur Demand

By Sungwoo Park and Jae Hur

Sept. 12 (Bloomberg) -- Soybeans gained for the first time in three days amid speculation that falling freight costs may spur demand and U.S. farmers may harvest less of the crop than the government forecast last month. Wheat advanced.

The Baltic Dry Index, a measure of shipping costs for commodities, fell yesterday to its lowest since March 2007. The U.S. Department of Agriculture today will project a soybean crop of 2.955 billion bushels, according to the average estimate of 24 analysts surveyed. That's down 0.6 percent from the USDA's August estimate.

``Freight rates have come down significantly,'' Nicholas Chung, senior manager of the commodity derivatives team at state-run Korea Development Bank, said in Seoul. ``There'll be plenty of ships out there, which will cut shipping costs for buyers, especially those who have shied away from U.S. grains because of high prices.''

Soybeans for November delivery gained as much as 16.25 cents, or 1.4 percent to $11.9225 a bushel in after-hours trading on the Chicago Board of Trade and were at $11.88 by 2:16 p.m. Singapore time. Futures, which touched a five-month low of $11.57 on Sept. 9, have slid 27 percent from a record $16.3675 on July 3.

The Baltic Dry Index of costs for international trade routes shed 133 points, or 2.7 percent, to 4,893 points, according to the Baltic Exchange in London yesterday. That was the 17th straight decline and marked a 46 percent slide for the year.

Corn for December delivery was up 0.25 cent at $5.335 a bushel after declining in the past three sessions. The futures have fallen 33 percent from a record $7.9925 on June 27.

Australian Wheat

The U.S. corn harvest will total 12.126 billion bushels, according to the survey, down 1.3 percent from the USDA's August estimate. Last year's harvest totaled 13.074 billion bushels after farmers increased planted acreage to a 63-year high.

Australia, the world's sixth-largest wheat exporter, may harvest 21 million metric tons of wheat, less than previously forecast 20 million to 24 million tons, because of dry weather, Rabobank Group said today. Output may drop as low as 19 million tons without normal rainfall and may still reach 23 million, the bank said. Last year's crop was 13 million tons.

Wheat for December delivery advanced as much as 7.75 cents, or 1.1 percent, to $7.34 a bushel and last traded at $7.325. Futures, which yesterday slipped to as low as $7.14, the lowest since Aug. 29, 2007, have fallen 46 percent below the $13.495 record set in February.

To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net