Wheat Heads for Biggest Monthly Loss in 22 Years on Dollar Gain

By Jae Hur

Oct. 31 (Bloomberg) -- Wheat was little changed, poised for the biggest monthly drop in more than 22 years, as a gain in the dollar curbed the appeal of U.S. supplies. Corn and soybeans headed for a fourth straight monthly loss.

Wheat declined 21 percent this month before today, the most since Feb. 1986, while the dollar rose 8.4 percent against the euro, the biggest monthly advance since its debut in 1999. A rise in the dollar normally reduces interest among overseas importers holding other currencies.

``The dollar's strength weighed on the grain market,'' said Nicholas Chung, senior manager of commodity derivatives at state-owned Korea Development Bank in Seoul. ``Overall trade will slow today before the end of the week and the month.''

Wheat for December delivery was down 1.5 cent at $5.365 a bushel in electronic trading in Chicago by 4:19 p.m. Singapore time after losing 4.1 percent yesterday as a government report showed the pace of U.S. exports had slowed. Wheat has fallen 60 percent from a record $13.495 on Feb. 27.

In the export market, Japan is seeking to buy 96,000 tons of milling wheat at a tender today.

U.S. overseas sales of wheat in the most recent four weeks sank to 1.79 million metric tons, down 32 percent from a year earlier, Department of Agriculture data showed in a report yesterday.

World wheat production will rise 12 percent to a record 683 million tons in the year to June 2009, up from 610 million tons this past year, the International Grains Council said yesterday.

Corn Production

Corn output will fall 1.8 percent to 773 million tons from 787 million, the council said. Global inventories on June 30 will total 111 million tons, down 13 percent from a year earlier, the IGC said.

Corn for December delivery fell as much as 8.5 cents, or 2.1 percent, to $4.01 a bushel and was at $4.0425 by 4:23 p.m. Singapore time.

Before today, the grain price had gained 9.9 percent this week, the first such gain in five weeks and the most since August 22. Corn has dropped 50 percent from a record $7.9925 on June 27.

U.S. exporters sold 413,100 tons of corn in the week ended Oct. 24, down 50 percent from the previous four-week average, the USDA said yesterday. Sales for delivery in the year ending Aug. 31 are 40 percent below the same period a year earlier.

Soybeans for January delivery fell 9.75 cents at $9.3325 by 4:27 p.m. Singapore time after falling as much as 13 cents, or 1.4 percent, to $9.30 a bushel. Before today, the contract had gained 8.8 percent this week and 9.8 percent this month. Futures have declined 43 percent from a record $16.3675 on July 3.

``Investors will take a cautious stance for the time being until they see a recovery in confidence in the global financial system and stocks,'' Chung said.

The dollar rose as much as 1.9 percent to $1.2668 per euro. Crude oil fell for a second day with the December delivery contract in New York declining as much as 3.3 percent to $63.80 a barrel. Oil is poised for its biggest monthly drop since trading began in 1983.

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