Soybeans, Corn Slump on U.S. Crop Forecasts, Demand Concerns

By Sungwoo Park and Jae Hur

Oct. 13 (Bloomberg) -- Soybeans plunged to the lowest in more than a year and corn declined after the U.S. forecast rising inventories and the global credit crisis stoked investor concerns that demand for food, animal feed and biofuels may drop.

The U.S. Department of Agriculture unexpectedly raised its estimate for the soybean and corn crops and said global wheat inventories will jump 21 percent after record prices encouraged farmers to plant more.

``The U.S. forecasts were actually higher than expected in terms of both inventories and production,'' Han Sung Min, a manager at the international marketing division of Korea Exchange Bank Futures Co., said in Seoul. ``Corn and soybeans may slide further because of the bearish fundamentals'' as well as concerns demand may decline because of the financial turmoil.

Soybeans for November delivery lost as much as 28.50 cents, or 3.1 percent, to $8.815 bushel, the lowest since Sept. 7, 2007, in after-hours electronic trading in Chicago and were at $9.085 as of 2:57 p.m. Singapore time. The contract lost 8.3 percent last week and is down 44 percent from a record $16.3675 on July 3.

The U.S. soybean harvest this year will be 1.7 percent bigger than forecast a month ago, the USDA said Oct. 10. Farmers will harvest 2.983 billion bushels this year, up from 2.934 billion projected in September, the report said.

Corn for December delivery fell as much as 10 cents, or 2.5 percent, to $3.9825 a bushel, the lowest since Nov. 30, 2007, and was at $4.055 by 2:58 p.m. The contract fell 10 percent last week and is 49 percent lower than the record $7.9925 on June 27.

Forecast Rises

The U.S. corn crop will be 12.2 billion bushels, 1.1 percent larger than forecast a month ago as warm weather in September helped plants boost yield potential, the department said.

Soybeans and corn pared early losses later as Asian stocks rebounded from the worst week since at least 1987 after Australia guaranteed bank deposits and European leaders agreed to support lenders in a global effort to end the credit crisis.

``It's going to take another couple of months until we see some confidence come back into the market,'' said Luke Chandler, senior commodity analyst at Rabobank Group in Sydney.

Wheat for December delivery rose as much as 15 cents, or 2.7 percent, to $5.785 a bushel and was at $5.755 by 3:02 p.m. in Singapore. It dipped as low as $5.5775 on Oct. 10, the lowest since June 12, 2007. The price dropped 12 percent last week and is down 57 percent from a record $13.495 on Feb. 27.

Importers Buy

In export news, Egypt bought 265,000 metric tons of wheat at a tender on Oct. 11, said Nomani Nomani, deputy chairman of the General Authority for Supply Commodities, the main state wheat buyer. Of the total, the country purchased 120,000 tons from the U.S. and the rest from Russia, he said.

``The Egyptian tender was a sign that importers are rushing for grain supplies following recent drops in Chicago futures and shipping costs,'' said Nicholas Chung, senior manager of the commodity derivatives team at state-owned Korea Development Bank in Seoul.

The Baltic Dry Index, a measure of shipping costs for commodities, had its biggest drop on record on Oct. 10 as a credit freeze weakened demand for commodities. The index fell 11 percent to 2,221 points, according to the Baltic Exchange in London. Bloomberg data on the index goes back to January 1985. It has dropped 55 percent over the past three weeks.

To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net