Soybeans Extend Losses to 13-Month Low on Financial Crisis

By William Bi

Oct. 16 (Bloomberg) -- Soybeans extended losses to the lowest since August 2007 on growing concern that global economic crisis will cut demand for food and the plunge in prices may force some buyers to cancel contracts. Corn also fell.

U.S. retail sales dropped in September by the most in three years as rising job losses and falling home prices slowed consumer purchases, the Commerce Department said yesterday. There has been speculation of Chinese buyers canceling South American soybeans, said Li Jianlei, analyst of Cofco Futures Co.

``Cash sales have been sliding along with drop in futures,'' Beijing-based Li wrote in a report today. ``Prices will extend the fall beyond the immediate term.''

Soybeans for November delivery fell as much as 18.5 cents, or 2.1 percent, to $8.54 a bushel, the lowest August 29, 2007, in after-hours electronic trading on the Chicago Board of Trade. It traded at $8.5825 at 3:25 p.m. Singapore time. Futures are 48 percent lower than 1a record $16.3675 on July 3.

China's record imports of 4.1 million tons in September also increased domestic supply, reducing future purchases and pressure prices, Li said.

Corn for December delivery fell as much as 9.25 cents, or 2.4 percent, to $3.7875 a bushel, the lowest since November 19, and traded at $3.8275. The most-active contract,which lost 5.7 percent yesterday, fell 52 percent from a record $7.9925 June 27.

On the Dalian Commodity Exchange, soybeans for May delivery fell the exchange-imposed 5 percent limit to 3,009 yuan ($440) a metric ton, and settled at 3,059 yuan.

Corn and soybeans may slump by as much as a third by January as buyers in Asia, the largest export market for U.S. grains, struggle to secure trade financing because of financial crisis, Tokyo-based Unipac Grain Ltd. said.

Reluctant Banks

Importers, including South Korea and Taiwan, are having difficulty purchasing from overseas as local banks are reluctant to offer letters of credit guaranteeing payment, Nobuyuki Chino, president of the grain trading company, said in an interview.

Wheat for December delivery in Chicago fell as much as 7.5 cents, or 1.4 percent, to $5.4825 a bushel, the lowest since june 11, 2007, and was at $5.5025 as of 3:29 p.m. Singapore time. The price, which dropped 3 percent yesterday, is down 59 percent from the record $13.495 on Feb. 27.

The Baltic Dry Index, a measure of commodity-shipping costs, fell 11 percent to 1,615 points, the lowest since Feb. 2003, according to the Baltic Exchange in London.

To contact the reporters on this story: William Bi in Beijing at wbi@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net