Corn, Soybeans Falls as Equities Drop, Reducing Growth, Demand

By Jae Hur

Nov. 11 (Bloomberg) -- Corn and soybeans declined as Asian stocks and crude oil dropped, renewing concerns the global credit crisis will reduce the outlook for economic growth and demand.

The MSCI Asia Pacific Index retreated as much as 3.2 percent to 87.36 after jumping 3.5 percent yesterday as China unveiled a $586 billion economic stimulus package. Crude fell as much as 3.4 percent to $60.29 a barrel. Corn and soybeans are used for food as well as a source of alternative fuel.

``The weakness in equity markets and declining oil prices were the key factors today putting pressure on grains,'' said Hiroaki Hama, an analyst at Mizuho Corporate Bank Ltd. in Tokyo. Given the latest U.S. government report, the downside for soybeans would be limited as supplies remain tight, he said.

Corn for December delivery declined as much as 1.6 percent to $3.775 a bushel in electronic trading in Chicago and stood at $3.79 by 3:10 p.m. Singapore time. Futures are 53 percent lower than a record $7.9925 on June 27.

Production will total 12.02 billion bushels, down from 12.03 billion projected on Oct. 28, the third monthly reduction, the U.S. Department of Agriculture said yesterday in a report. While unsold supplies of U.S. corn before next year's harvest will be 3.3 percent bigger than forecast last month, they will be 31 percent below last year, the USDA said.

Corn may return to the peak next year on rising demand for its use in fuel and as farmers may cut planting on falling prices and tight credit, said David Dawe, senior economist at the Food and Agriculture Organization.

Biofuel Demand

``We may see some fall in production,'' Dawe, who works at the FAO's Agricultural and Development Economics Division, said in an interview in Yokohama, Japan. ``On the other hand, you have continuing growth in biofuel demand.''

Soybeans for January delivery lost as much as 2.1 percent to $9.28 a bushel and last traded at $9.3025. Futures, which gained yesterday 2.9 percent, have declined 43 percent from a record $16.3675 on July 3.

U.S. farmers, the world's largest soybean growers and exporters, will harvest 2.921 billion bushels, less than the 2.938 billion projected Oct. 28, the USDA said yesterday.

Wheat for December delivery was down 0.7 percent at $5.165 a bushel as of 3:10 p.m. Singapore after trading between $5.1525 and $5.2175. Futures are down 62 percent from a peak $13.495 on Feb. 27.

About 603 million bushels will be in storage by May 31, 2009, almost double a 34-year low of 306 million a year ago, the USDA said. Last month, the USDA forecast 601 million and analysts expected 589 million on average, a Bloomberg survey showed.

U.S. winter-wheat conditions improved in the past week as rains bolstered soil moisture for newly seeded fields, the USDA said yesterday after the Chicago market closed.

About 68 percent of the winter crop was in good or excellent condition as of Nov. 9, up from 67 percent a week earlier and 49 percent at the same time in 2007, the USDA said in a report. About 94 percent of the crop was sown, up from 90 percent a week earlier, and 83 percent of the plants had emerged from the ground, up from 76 percent, the agency said.

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