Soybeans Advance After Slump to 13-Month Low Attracts Buyers

By Jae Hur

Oct. 7 (Bloomberg) -- Soybeans gained for the first time in four days in Chicago on speculation a price decline to a 13-month low amid the global credit crisis may lure buyers. Corn recovered from a 10-month low.

The oilseed has fallen 43 percent since reaching a record $16.3675 a bushel on July 3 on concern the widening credit crunch will deepen a global economic slump, cutting demand for animal feed and biofuel made from the crop. In China, soybeans tumbled by the day's limit for a second day and corn extended losses.

``It's a technical rebound,'' said Nicholas Chung, senior manager of the commodity derivatives team at state-owned Korea Development Bank in Seoul. ``For now, few investors are willing to take new positions. People pay little heed to fundamentals as the credit crunch has frozen investment sentiment.''

Soybeans for November delivery rose as much as 2.3 percent to $9.435 bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $9.40 as of 2:51 p.m. Singapore time. The oilseed earlier dipped to $9.1675, the lowest for the most- active contract since Sept. 12, 2007.

Corn for December delivery was up 0.4 percent at $4.2575 a bushel after falling to $4.1725 a bushel, the lowest since Dec. 11. Futures have lost 47 percent from a June 27 peak of $7.9925.

The 14-day relative strength index for the two commodities, a gauge of momentum, has fallen below 30 since Oct. 2, signaling prices may rise.

Equities Tumble

Soybeans and corn tumbled by their daily limit in Chicago yesterday as stocks plunged around the world, treasuries rose and crude oil dropped below $88 a barrel as the credit-market seizure caused bank bailouts to spread. The Reuters/Jefferies CRB Index of 19 raw materials fell to the lowest in 13 months.

``The grains markets, along with the commodities complex generally, are currently under the heavy weight of a deteriorating global economic outlook in combination with a sharply appreciating U.S. dollar,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney.

Crude oil rose for the first time in five days, with the November delivery in New York gaining as much as 3.4 percent to $90.75 a barrel . The contract lost 6.5 percent yesterday after touching $87.56, the lowest since Feb. 7.

The dollar was at $1.3591 per euro from $1.3499. It touched $1.3444 yesterday, the highest since August 2007, when the credit crisis started to gain momentum.

Oil and commodities were also supported as Australia's bigger-than-expected interest-rate cut spurred speculation central banks around the world will reduce borrowing costs to cushion their economies from the credit freeze, Chung said.

Slow Harvest

The pace of the U.S. corn and soybean harvests remained behind those of recent years, the government said, after June flooding delayed planting and cool temperatures in August slowed plant development.

About 14 percent of the corn was collected as of Oct. 5, compared with 39 percent a year earlier and the previous five- year average of 30 percent, the U.S. Department of Agriculture said yesterday in a report. Soybean harvesting was 31 percent completed, compared with 43 percent a year earlier and the five- year average of 41 percent.

Wheat for December delivery rose as much as 2.4 percent to $6.095 a bushel and was at $6.0525 as of 2:56 p.m. in Singapore. The contract slumped 7 percent yesterday as the dollar's rally reduced the appeal for U.S. supplies. The price is down 55 percent a record high of $13.495 on Feb. 27.

In China, January-delivery soybeans on the Dalian Commodity Exchange fell the 5 percent daily limit to settle at 3,643 yuan ($532) a metric ton. Corn for May delivery fell as much as 3.3 percent to 1,620 yuan before settling at 1,651 yuan.

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