Chicago Soybeans, Corn Climb as Price Slump May Revive Demand

By William Bi and Jae Hur

Oct. 15 (Bloomberg) -- Soybeans advanced from a 13-month low on speculation Brazilian production may fall next year and that a 44 percent plunge in prices may sustain food demand even as the global financial crisis erodes earnings. Corn gained.

The 2009 soybean crop in Brazil, the world's second-biggest producer, will be smaller because of reduced fertilizer use and dry weather, Oil World said. In the event of a recession, food choice is one of the last things consumers change, said Rick Greubel, president of Tyson Foods Inc.'s international division.

``The financial meltdown made people see the fundamentals as more negative than they actually are,'' Cao Yanhui, research manager at Liaoning Cifco Futures Co., said by phone from Dalian. ``Output from South America, even the U.S., may not be as bearish as what some people were made to believe.''

Soybeans for November delivery gained as much as 15 cents, or 1.7 percent, to $9.11 a bushel in after-hours electronic trading on the Chicago Board of Trade. They traded at $9.0850 at 3:32 p.m. Singapore time. Futures reached a record $16.3675 on July 3, and touched a 13-month low of $8.815 on Oct. 13.

Corn for December delivery gained as much as 4.75 cents, or 1.2 percent, to $4.16 a bushel, and traded at $4.135. The price touched $3.9825 on Oct. 13, the lowest since Nov. 30. The most- active contract fell 48 percent from a record $7.9925 June 27.

The pace of the U.S. corn and soybean harvests accelerated as dry, warm weather increased maturity of the crops after June flooding delayed planting and cool temperatures in August slowed plant development.

Planting Delay

About 21 percent of the corn was collected by Oct. 12, compared with 14 percent a week ago, 50 percent a year earlier and the previous five-year average of 41 percent, the U.S. Department of Agriculture said yesterday. Soybean harvesting was 51 percent completed, compared with 31 percent a week ago, 61 percent a year earlier and the five-year average of 61 percent.

``With lower corn and soybean prices in Chicago, declining shipping costs will help boost interest among overseas buyers,'' Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said from Tokyo.

Wheat for December delivery in Chicago rose as much as 6.75 cents, or 1.2 percent, to $5.7975 a bushel and was at $5.7675 at 3:32 p.m. Singapore time. The price, which dropped 2.6 percent yesterday, is down 57 percent from the record $13.495 on Feb. 27.

The Baltic Dry Index, a measure of commodity-shipping costs, plunged to its lowest since August 2005 as the credit squeeze sapped companies' ability to finance cargoes. The index fell 8.5 percent to 1,809 points, according to the Baltic Exchange in London, 85 percent below a record reached on May 20.

On the Dalian Commodity Exchange, soybeans for May delivery fell as much as the exchange-imposed 5 percent limit to 3,140 yuan ($460) a metric ton, and finished at 3,167 yuan.

To contact the reporters on this story: William Bi in Beijing at wbi@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net