Corn, Soybeans Rise as Export Demand Climbs After Price Slump

By Jeff Wilson

Oct. 17 (Bloomberg) -- Corn rose the most in five weeks and soybeans gained for a second straight day on signs that a price slump this month will revive demand for shipments from the U.S., the world's largest exporter of the crops.

U.S. export sales of corn jumped 68 percent the week ended Oct. 2, the Department of Agriculture said today. Soybean sales were double the previous four-week average, and sales of soybean meal, an animal feed, were the most since May, agency data show. Yesterday, corn dropped to an 11-month low, and soybeans touched the lowest since August 2007.

``The export sales were a surprise to the trade because of all the talk about declining demand,'' said Roy Huckabay, an executive vice president at the Linn Group in Chicago. ``The market feels sold out with the price drop beginning to stir some buying.''

Corn futures for December delivery rose 18.5 cents, or 4.8 percent, to $4.03 a bushel on the Chicago Board of Trade, the biggest percentage gain for a most-active contract since Sept. 12. Yesterday, corn fell to $3.71, the lowest since Nov. 2. Before today, the price dropped 21 percent this month.


Soybean futures for January delivery climbed 26.5 cents, or 3 percent, to $9.0675 a bushel. Yesterday, the price gained 0.9 percent after touching $8.38, the lowest since Aug. 27, 2007. Before today, soybeans dropped 16 percent in October.

This week, corn dropped 1.3 percent, and January soybeans were down 2 percent, extending slides to three weeks.

Corn rose to a record $7.9925 on June 27, and soybeans reached an all-time high of $16.3675 on July 3. The U.S. is the biggest producer of both crops.

Soybean Sales Climb

Cumulative soybean sales for delivery before Aug. 31 were 12.07 million metric tons, up 6.7 percent from a year earlier, the USDA said. The largest sales last week were to unnamed buyers, with China the second-biggest.

U.S. sales for delivery to China, the biggest global importer of the oilseed, are up 2.5 percent to 5.82 million tons, or 48 percent of planned shipments.

``Export commitments are 446 million bushels versus 423 million a year ago and a record for this date,'' William Tierney, the head of North American research at LMC International in Washington, said in an e-mail. ``The USDA is underestimating exports by 75 million to 100 million bushels,'' based on sales today relative to the historical pace, he said.

Billionaire investor Warren Buffett recommended buying equities, boosting stocks and sending commodities higher.

``The stock-market rally and Buffett's endorsements lifted market confidence across the board,'' said Thomas Uhlmann, a floor broker at Penson GHCO in Chicago. ``The export sales were a big story because they showed that grain demand is still elastic.''

The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 3.1 percent. Yesterday, the measure dropped to the lowest in four years.

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans at $26.8 billion, government figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net