By Feiwen Rong
Dec. 9 (Bloomberg) -- Soybeans declined and corn dropped, after its biggest rally in more than five weeks yesterday, on speculations gains were overdone amid a slowing world economy.
A global recession is reducing demand for raw materials with consumers curbing spending and credit restrictions hampering importers. Open interest in soybean and corn futures in Chicago has fallen at least 45 percent since February.
“For most agricultural commodities supply is overwhelming demand and investors are focusing on weak fundamentals in the broad raw materials market,” Nie Ben, manager at Shanghai Continent Futures Co., said by telephone from Dalian.
Soybeans for January delivery fell 1 percent to $8.1225 a bushel at 4:30 p.m. in Beijing, in after-hours electronic trading on the Chicago Board of Trade. The contract jumped 4.7 percent to $8.205 a bushel yesterday, the biggest advance since Nov. 24.
On the Dalian Commodity Exchange, May-delivery soybeans advanced 0.5 percent to close at 2,968 yuan ($432) a ton. The most-active contract dropped 9.9 percent last week.
“The China market is particularly weak because demand from end users such as the animal feed industry is low,” Nie said. “Investors aren’t sure the recently announced government purchases will amount to anything significant so everyone is sitting on their hands right now,” he said.
China, the world’s largest grain grower, said on Dec. 2 it plans to boost its purchases of soybeans, corn and unhusked rice in the northern Heilongjiang province to help farm incomes, stabilize prices and increase stockpiles.
The central government has authorized the province to buy about 1 million metric tons of soybeans, 1.3 million tons of corn and 2.6 million tons of unhusked rice.
March-delivery corn on the Chicago exchange fell 1.4 percent to $3.255 a bushel at 4:36 p.m. in Beijing, after rallying 6.7 percent yesterday. China is a net exporter of corn. Wheat for March delivery was down 0.7 percent at $4.87 a bushel.
Rough rice for March delivery advanced 28.5 cents, or 2 percent, to $14.565 per 100 pounds.
To contact the reporter on this story: Feiwen Rong in Beijing at frong2@bloomberg.net
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