Corn, Soybeans Fall as Dollar's Rally Reduces Demand Outlook

By Jae Hur

Nov. 5 (Bloomberg) -- Corn and soybeans declined for the first time in three days as the dollar rose against the euro and crude oil pared the previous day's gain, reducing demand prospects for food, feed and fuel. Wheat also fell.

The dollar added as much as 0.5 percent to $1.2912 against the euro after losing yesterday 2.7 percent. Crude oil declined as much as 1.8 percent to $69.25 a barrel after gaining 10 percent yesterday. Corn advanced 2.5 percent yesterday and soybeans rose 2.3 percent.

``The dollar's rebound today put pressure on grains and other commodities,'' Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone. Recent gains in global stock markets also provided support for the grains market, he said.

Corn for December delivery fell as much as 0.9 percent to $4.0925 a bushel in electronic trading in Chicago and was at $4.125 by 10:40 a.m. Singapore time. The price has fallen 48 percent from a record $7.9925 June 27.

Soybeans for January delivery lost as much as 1.3 percent to $9.465 a bushel and stood at $9.525. The contract has declined 42 percent from a record $16.3675 on July 3.

Corn's correlation with the euro-dollar exchange rate stood at 0.86, compared with 0.66 a month earlier. A reading of 1 would mean the two moved together.

Market participants are waiting for a government update for supply and demand early next week to see any revisions in output forecast in the U.S., Shigemoto said.

The U.S. Department of Agriculture is scheduled to release its fourth survey-based production forecasts for corn and soybeans on Nov. 10 at 8:30 a.m. in Washington.

Asian stocks gained for the third day as investors speculate the next U.S. president will strengthen measures to overcome a recession in the world's largest economy. The MSCI Asia Pacific Index added as much as 4.2 percent to 94.00.

Wheat for December delivery was down 3.75 cents, or 0.7 percent, at $5.6875 a bushel as of 10:55 a.m. Singapore time. The contract gained 1.8 percent yesterday. Futures are still down 58 percent from a record $13.495 on Feb. 27.

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