Soybeans Gain for Third Day as Cheaper Import Costs Lure Buyers

By Jae Hur

Oct. 9 (Bloomberg) -- Soybeans and corn extended gains on speculation a drop to the lowest level this year may spur buying and a government report will show U.S. crop yields fell more than expected after flooding in June and a dryness in August.

Farmers will harvest 1.8 percent less corn than forecast in August and 1.3 percent fewer soybeans, the U.S. Department of Agriculture said Sept. 12 in a report. The USDA plans to revise the estimate tomorrow. Corn's 14-day relative strength index, a momentum gauge, is below 30 since Oct. 2, signaling a price rise.

``The gains we're seeing in soybeans and grains are in part driven by a perception in the market that Friday's USDA report will be friendly, especially for soybeans,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney.

Corn for December delivery added as much as 10 cents, or 2.3 percent, to $4.375 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $4.32 by 11:49 a.m. Singapore time.

The contract fell to $4.07 yesterday, the lowest for a most-active contract since Dec. 4. Corn, which reached a record $7.9925 June 27, plunged a record 36 percent in the past quarter.


``Considering the massive recent sell-off in grains and soybeans we're due for a bounce, some weakness in the dollar and an improvement in sentiment after the global rate cuts would provide further stimulus for an upward move,'' Hassall said.

Asian stocks rose, snapping a five-day plunge, on speculation global interest-rate cuts may stimulate economic growth, boosting demand prospects for food, animal feed and fuel.

Lower Costs

The Federal Reserve and other central banks delivered a coordinated round of interest-rate cuts to shield economies from the worst financial crisis since the Great Depression.

The Baltic Dry Index, a measure of shipping costs for commodities, fell to its lowest since June 2006 as slowing economic growth curbed demand for raw materials and led to a surplus of vessels for hire. The index fell 5.4 percent, to 2,764 points, according to the Baltic Exchange in London. It's 77 percent lower than the record on May 20.

``Compared with several weeks ago, import costs are cheaper as the grain price and shipping costs tumbled,'' said Nicholas Chung, senior manager of the commodity derivatives team at state-owned Korea Development Bank in Seoul.

Soybeans for November delivery jumped as much as 18 cents, or 1.9 percent, to $9.82 bushel and were at $9.7425 as of 11:54 a.m. Singapore time. The oilseed yesterday fell to $9.11, the lowest for a most-active contract since Sept. 12, 2007. Futures, which reached a record $16.3675 July 3, dropped 34 percent in the third quarter.

Wheat for December delivery advanced as much as 10 cents, or 1.6 percent, to $6.18 a bushel and was at $6.1425 at 11:46 a.m. in Singapore. The contract yesterday touched $5.8625, the lowest since July 5, 2007. Wheat is down 54 percent from a record $13.495 on Feb. 27.

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