Corn Gains on Speculation Drop to 9-Month Low May Lure Buyers

By Jae Hur

Oct. 3 (Bloomberg) -- Corn climbed for the first time in seventh days amid speculation prices at a nine-month low and falling shipping costs may lure overseas buyers. Soybeans fell.

Corn dropped 16 percent this week before today's gain as the dollar reached a one-year high yesterday against a basket of six currencies including the euro and yen. Corn's 14-day relative strength index, a gauge of momentum, fell below 30 yesterday, signaling prices may rise.

``The grain price fell too much and too fast,'' said Kenji Kobayashi, an analyst at Kanetsu Asset Management Co. in Tokyo. With tumbling freight costs, current prices would prompt overseas buyers seek the grain, he said.

Turmoil in global financial markets has driven investors to take cash out of commodities, said Kobayashi. Reuters/Jefferies CRB Index of 19 raw materials is down 9.9 percent this week, the most since at least 1956.

Weakening demand for materials has led to a drop in freight costs. The Baltic Dry Index, a measure of shipping costs for commodities, fell 1.2 percent to 2,990 points, according to the Baltic Exchange in London. That's the first time the index has fallen below 3,000 points since July 2006.

Corn for December delivery was up 2.5 cents, or 0.6 percent, at $4.565 a bushel at 12:05 p.m. Singapore time after gaining to $4.60 in after-hours electronic trading on the Chicago Board of Trade. The contract earlier touched $4.53, the lowest since Dec. 31. Futures have lost 43 percent from a June 27 peak of $7.9925.

Soybeans

Soybeans for November delivery fell 1.5 cents to $10.025 a bushel at 12:05 p.m. Singapore time after rising as high as $10.115. The contract yesterday touched $9.9225, the lowest since Nov. 1. The oilseed has fallen 14 percent this week and is down 39 percent from a record $16.3675 on July 3.

Wheat for December delivery was up 1.5 cents at $6.375 a bushel at 11:37 a.m. Singapore time after dropping 5 percent yesterday to $6.30, the lowest since Aug. 1, 2007.

The grain has declined 11 percent this week, the most since March 21, and the sixth straight weekly loss. The price was down 53 percent an all-time high of $13.495 on Feb. 27.

The dollar was at $1.3862 per euro from $1.3819 yesterday, when it touched a one-year high of $1.3748.

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