Corn, Soybeans Drop as Dollar Gain Curbs Demand for U.S. Crops

By Jae Hur

Jan. 6 (Bloomberg) -- Corn declined for a second day and soybeans fell on speculation the strengthening dollar will reduce demand for U.S. supplies from overseas importers. Wheat dropped for the first time in five days.

The dollar rose as much as 2.7 percent yesterday to a three- week high against the euro on speculation that President-elect Barack Obama’s plan to cut taxes will help the U.S. recover from a recession. Last year, corn fell 10.7 percent and soybeans dropped 19 percent, while the dollar gained 4.2 percent.

“The strong dollar has dragged grains and other commodities lower,” Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone.

Corn for March delivery fell as much as 1 percent to $4.0725 a bushel and was at $4.085 in after-hours Chicago trading at 10:45 a.m. Tokyo time. The price, which reached a record $7.9925 on June 27, touched $3.055 on Dec. 5, the lowest for two years.

Soybeans for March delivery lost as much as 1 percent to $9.7675 a bushel and last traded at $9.8275. The price touched an 18-month low of $7.7625 on Dec. 5 after reaching record $16.3675 in July.

The oilseed rose yesterday on speculation dry, warm weather will damage crops in Brazil and Argentina, the biggest producers after the U.S.

“Despite some recent rainfall in Southern Brazil, the weather outlook for key South American growing regions remains unfavorably warm and dry which is price-supportive for the grains,” Toby Hassall, an analyst with Commodity Warrants Australia in Sydney said.

Crude oil for February delivery fell 1 percent to $48.61 a barrel at 10:48 a.m. in Tokyo on the New York Mercantile Exchange after gaining 5.3 percent yesterday. The dollar traded at $1.3575 per euro from $1.3635 late in New York. The dollar traded as high as $1.3547 yesterday, the highest since Dec. 15.

Wheat for March delivery lost 0.4 percent to $6.145 a bushel. The grain, which touched a record $13.495 on Feb. 27, plunged 31 percent last year, the first annual decline in four years.

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