Corn, Soybeans Decline, Erasing Gains, After Dollar Rebounds

By Tony C. Dreibus

Nov. 19 (Bloomberg) -- Corn and soybeans fell for a second day, erasing earlier gains, on speculation that demand for U.S. commodities will decline after the dollar pared losses.

The value of the dollar versus six major world currencies including the euro and U.K. pound was little changed after dropping as much as 1.4 percent in early trading. A stronger greenback reduces demand for U.S. supplies including corn and soybeans, eroding the purchasing power of overseas buyers.

``Today we have to watch the euro and we have to watch the pound,'' said Vince Ambrose, a trader at MF Global in Chicago. ``I'm looking for a rally and then a selloff in corn and beans.''

Corn futures for December delivery fell 1.25 cents, or 0.3 percent, to $3.7875 a bushel on the Chicago Board of Trade. The price, which gained 1.3 percent in early trading, is down 53 percent from a record $7.9925 on June 27.

Soybean futures for January delivery dropped 5 cents, or 0.6 percent, to $8.97 a bushel in Chicago. The most-active contract is down 45 percent from the all-time high of $16.3675 on July 3.

``The weaker dollar was supportive'' earlier in the day, said Bob Utterback, chief executive officer at Utterback Marketing Services Inc. in New Richmond, Indiana. ``But commodities opened too strong. They're very range-bound.''

China Trade

Soybean futures also fell on speculation that China will reduce purchases from the U.S., the biggest exporter, and try to become more self-sufficient. China may buy more soybeans from domestic growers to boost prices and farm incomes, two trading executives at state-owned companies said last week. That may prompt farmers to plant more.

``The market's getting a little dismayed because it doesn't hear positive export news coming out of China,'' Utterback said. ``They want to build a support structure and become more independent.''

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans at $26.8 billion, government figures show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.