Soybean Prices Fall as Chinese Demand to Drop; Corn Declines

By Jeff Wilson

Oct. 14 (Bloomberg) -- Soybean prices fell on speculation that demand will decline in China, the world's biggest buyer. Corn dropped on concern that the plan to unlock global credit markets won't avert a recession and a slide in commodity use.

China imported 4.1 million metric tons of soybeans in September, up 8 percent from August and the most since at least 2004, as consumers rushed to avoid an increase in taxes to 3 percent from a temporary 1 percent levy. The world's fourth- biggest economy probably expanded 9.5 percent in the third quarter, the slowest pace since 2004, Morgan Stanley estimates.

``China will slow imports of soybeans'' because of the higher tax, said Alan Brugler, the president of Brugler Marketing & Management LLC in Omaha, Nebraska. ``China doesn't want to import a bunch of beans when their farmers are harvesting crops.''

Soybean futures for November delivery fell 32 cents, or 3.4 percent, to $8.96 a bushel on the Chicago Board of Trade. The most-active contract has dropped 45 percent from a record $16.3675 on July 3, touching a 13-month low of $8.815 yesterday.

China's soybean harvest will rise 22 percent to 16.5 million metric tons in the year that began Oct. 1 from a year earlier, the U.S. Department of Agriculture said last week. China's imports were forecast to fall 1.4 percent to 36 million tons.

Export Inspections

U.S. soybeans inspected for export fell 65 percent to 13.2 million bushels in the week ending Oct. 9 from a year earlier, the USDA said today. Shipments in the year that began Sept. 1 are down 57 percent from a year earlier, government data show. The U.S. is the world's largest exporter.

``Large imports have cannibalized the new-crop imports'' in China, Anne Frick, a senior oilseed analyst at Prudential Financial, said in a report. ``An even greater year-to-year decline'' in Chinese imports is expected, Frick said.

The Reuters/Jefferies CRB Index of 19 raw materials fell 0.8 percent as energy prices dropped. Corn erased a gain of as much as 4.1 percent.

Treasury Secretary Henry Paulson urged banks getting $250 billion of taxpayer funds to channel the money to customers quickly to halt a credit freeze that is threatening to bankrupt companies and slash jobs.

``People are nervous about the economy,'' said Sid Love, a grain analyst for Joe Kropf & Sid Love Consulting in Overland Park, Kansas. ``The consumer is not getting any debt bailout, and that's the next concern.''

Corn futures for December delivery fell 0.25 cent to $4.1125 a bushel. The price yesterday touched $3.9825, the lowest since Nov. 30. The most-active contract has plummeted 49 percent from a record $7.9925 on June 27.

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.