Corn, Soybeans Rise as Low Prices Slow U.S. Farmer Sales

By Jeff Wilson

Nov. 14 (Bloomberg) -- Corn and soybeans rose on speculation that U.S. farmers, the world's biggest growers and exporters, are withholding newly harvested supplies after prices tumbled to one-year lows.

The discount for cash corn in Iowa compared with Chicago futures narrowed before today to 38 cents a bushel from 73 cents on Nov. 4, signaling tighter supplies of available grain. About 71 percent of the corn crop was harvested as of Nov. 9, less than the 92 percent collected a year earlier, government data show. Cash soybeans in Iowa are down 46 percent from a July peak and 15 percent lower than a year ago.

``The lack of farmer selling makes any demand for corn feel much stronger,'' said Scott McAfee, a grain buyer for the Andersons Inc. in Dunkirk, Indiana. ``Farmers are not selling, and we are pulling forward December-delivery contracts'' to increase immediate supplies, McAfee said.

Corn futures for December delivery rose 3.25 cents, or 0.9 percent, to $3.8025 a bushel on the Chicago Board of Trade, capping a weekly gain of 1.3 percent, the second in three weeks. The price on Nov. 11 touched $3.6025, the lowest in more than a year and is down 52 percent from a record $7.9925 on June 27.

Soybean futures for January delivery rose 2 cents, or 0.2 percent, to $8.96 a bushel in Chicago, the first gain in four sessions. The price still dropped 2.7 percent this week, the sixth decline in the past seven weeks. Most-active futures fell Oct. 16 to $8.38, the lowest since August 2007. The price touched a record $16.3675 on July 3.

Stem the Crisis

Corn and soybeans also got a boost after Treasury Secretary Henry Paulson said the government's $700 billion rescue plan is enough to stem the financial crisis.

The rally yesterday in the euro against the yen signals that financial stability may be returning, said Jim Gerlach, president of A/C Trading Inc. in Fowler, Indiana.

``The currency spread had a big reversal yesterday and that could be a warning of an impending change in trend,'' which would suggest some financial-market stability, Gerlach said. ``We're getting awfully close to bottoms in basic staples such as food commodities.''

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

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net