Corn Declines as Stocks Slump, Raising Growth, Demand Concerns

By Jae Hur

Nov. 6 (Bloomberg) -- Corn fell for a second day as declining equities in the U.S. and Asia raised concern that the global economy was headed toward recession, curbing demand for food, feed and fuel. Soybeans gained.

The MSCI Asia Pacific Index slid as much as 6.4 percent today after U.S. stocks plunged as reports on jobs and the service industries stoked concern that the economy will worsen even as President-elect Barack Obama tries to stimulate growth. Corn lost 5.5 percent yesterday, the most since Oct. 22.

``The global macroeconomic environment continues to rattle commodities and the drop in U.S. stock markets overnight has eroded the generally positive tone we've seen in stocks over the last week,'' said Toby Hassall, an analyst at Commodity Warrants Australia Ltd. in Sydney.

Corn for December delivery fell as much as 1.4 percent to $3.85 a bushel in electronic trading in Chicago and stood at $3.88 by 2:01 p.m. Singapore time. The price Oct. 27 touched $3.64, the lowest since Oct. 25, 2007. Futures have fallen 51 percent from an all-time high of $7.9925 on June 27. 1

Service industries in the U.S. contracted the most on record to 44.4 last month, below the 47 estimated by economists, according to a report from the Institute for Supply Management. Meanwhile, U.S. companies cut 157,000 jobs in October, the most since November 2002 and bigger than an estimated drop of 102,000, according to ADP Employer Services.

The S&P 500 tumbled 5.3 percent to 952.77 points yesterday and the Dow Jones Industrial Average retreated 5.1 percent to 9,139.27. The dollar gained as much as 0.9 percent to $1.2838 against the euro. Crude oil slid as much as 1.5 percent to $64.35 a barrel after falling 7.4 percent yesterday.

Soybeans

Soybeans for January delivery were up 0.3 percent at $9.0675 a bushel by 2:12 p.m. Singapore time after trading between $8.9625 and $9.115. The contract fell 5.7 percent yesterday, the biggest percentage drop since Oct. 10. Futures have declined 45 percent from a record $16.3675 on July 3.

``We're seeing some strength in the dollar today which is keeping a lid on a grains rebound after last night's overselling,'' Hassall said ``The supply-demand setup for soy appears fairly supportive and a refocus on market-specific fundamentals may offer some upside to soy prices.''

Wheat for December delivery was down 0.3 percent at $5.355 a bushel as of 2:09 p.m. Singapore time after losing 6.2 percent yesterday on speculation that demand for U.S. grain will wane as global production increases. Futures are down 60 percent from a record $13.495 on Feb. 27.

About 13.2 million bushels of U.S. wheat were inspected for export in the seven days ended Oct. 30, down 40 percent from the previous week, the U.S. government said. Global production in the marketing year through June 30 will jump 12 percent to a record 683 million metric tons (25.1 billion bushels), the London-based International Grains Council said on Oct. 30.

Japan is seeking to buy 100,000 metric tons of U.S. milling wheat at a tender today.

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