Soybeans, Corn Gain as U.S. Farmer Withhold Sales on Low Prices

By Jae Hur

Nov. 17 (Bloomberg) -- Soybeans and corn extended gains on speculation that U.S. farmers, the world's biggest growers and exporters, are withholding newly harvested supplies after prices tumbled to more than one-year lows.

Soybeans slid to a 14-month low in Chicago on Oct. 16 and corn fell to the lowest in more than a year on Nov. 11, as investors sought cash amid the global credit crisis while slowing economies raised concern demand may fall.

``Farmers are expecting that the current price is the low for the year, and we're hopeful soybean prices will be increasing from now until spring,'' Mark Pietz, competitiveness chair at the United Soybean Board, said in Tokyo on Nov. 14.

Soybeans for January delivery gained as much as 1.4 percent to $9.0875 a bushel in after-hours trading in Chicago and traded at $9.035 at 2:40 p.m. Singapore time. The price fell 2.7 percent last week, the sixth decline in the past seven weeks. Most-active futures dropped Oct. 16 to $8.38, the lowest since August 2007. The price reached a record $16.3675 on July 3.

Variable production costs rose 27 percent to $140 per acre this year as oil rallied and will likely advance 14 percent next year as a drop in crude prices won't be immediately reflected in fertilizer and chemicals, Pietz said in an interview. Seed costs will also increase, he said.

Consumption of the beans used in animal feed, cooking oil and biofuels will expand next year, even if the rate of growth declines, Pietz said.

Soybean Output

World soybean production in the year that began Oct. 1 will total 235.74 million tons, down from the October forecast of 238.21 million, the U.S. Agriculture Department said Nov. 10. Production in the previous year was 220.9 million tons.

Consumption is forecast at a record 234 million tons, down from the October forecast of 235.2 million and up from an estimated 230 million last year, according to the USDA.

Corn for December delivery added as much as 1.5 percent to $3.8575 a bushel and was at $3.8475 at 2:38 p.m. Singapore time. The grain rose 1.3 percent last week, the second in three weeks. The price on Nov. 11 touched $3.6025, the lowest in more than a year. Futures reached a record $7.9925 on June 27.

Wheat for March delivery advanced as much as 2.2 percent to $5.87 a bushel and was at $5.79 at 2:28 p.m. in Singapore. Futures, which reached a record $13.495 on Feb. 27, touched $4.965 on Oct. 24, the lowest since June 2007.

The price rose 10 percent last week, the biggest such gain since June 13, as Japan made its first purchase of U.S. wheat in two months and dry weather in Australia diminished prospects for maturing plants. Argentina's annual wheat output may drop 36 percent to 10.5 million metric tons, the Buenos Aires Cereals Exchange said Nov. 14 in a report.

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