Corn, Soybeans Decline as Strengthening Dollar May Erode Demand

By Jae Hur

Jan. 22 (Bloomberg) -- Corn and soybeans fell on speculation the strengthening dollar may cut demand for U.S. supplies. Wheat climbed for a second day.

The dollar advanced as much as 0.6 percent against the euro after touching $1.2825 yesterday, the highest since Dec. 9. A rise in the dollar curbs interest among overseas buyers holding other currencies. Corn slipped 4.5 percent this month, while the dollar gained 6.9 percent.

“The dollar’s move has been a major factor for grains and other commodities,” Toshimitsu Kawanabe, an analyst at broker Central Shoji Co. in Tokyo, said. Forecast rain in Argentina from Jan. 25 has also eased concern about the level of drought damage to the crop there, he said.

Corn for March delivery dropped as much as 1.4 percent to $3.85 a bushel in Chicago trading and was at $3.8875 at 2:30 p.m. in Singapore. The contract rose 1.8 percent yesterday. Prices have fallen 51 percent from a record $7.9925 in June.

Soybeans for March delivery fell 0.2 percent to $10.1875 a bushel after trading between $10.12 and $10.3475. The contract gained 2.9 percent yesterday, the most since Jan. 9. Prices are down 38 percent from a record $16.3675 on July 3.

Argentina yesterday cut its soybean and corn planting forecasts because of the worst drought in at least 40 years.

Farmers will plant 16.5 million hectares (41 million acres) with soybeans this year, down 7.3 percent from a previous estimate of 17.8 million hectares, the Agriculture Secretariat said. The agency also trimmed its estimate for corn planting by 2.9 percent to 3.4 million hectares. A continued dry spell may pare potential crop yields, the secretariat said.

Soybean Outlook

Argentina was the world’s second-largest corn exporter last year after the U.S., according to the USDA. The country is the world’s third-largest soybean grower behind the U.S. and Brazil.

The outlook for soybean prices is unclear, Kawanabe said.

“China’s recent soybean purchases will slow because of the Lunar New Year next week,” he said. “The question is whether China will continue to buy the oilseed and what the weather impact on crops in South America will be after the Chinese New Year holidays.”

Wheat for March delivery rose as much as 1.5 percent to $5.805 a bushel and last traded at $5.75. It jumped 4 percent yesterday. Prices have tumbled 57 percent from a record $13.495 on Feb. 27.

In the export market, Japan plans to buy 157,000 tons of the grain today, including 90,000 tons from the U.S. South Korea is seeking to buy 165,000 tons of corn for feed production.

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