Corn, Soybeans Drop as Global Recession Lowers Demand Prospect

By Jae Hur

Feb. 24 (Bloomberg) -- Corn and soybeans declined on speculation that the deepening global recession will curb demand for food, animal feed and alternative fuel. Wheat dropped for a third day.

Asian stocks fell, dragging the regional benchmark toward the lowest close in more than five years. A drop in U.S. stocks yesterday sent the Standard & Poor’s 500 Index to a 12-year low. The widening global recession has driven down corn prices for seven straight weeks while soybeans fell in five of the past seven weeks.

“Basically the grains and oilseed complex was believed to be less sensitive to an economic slowdown, but it’s no longer safe now as the global economy plunges by this much and no one can see the end of this slowdown,” said Toshimitsu Kawanabe, an analyst at Central Shoji Co. in Tokyo.

Corn for March delivery fell 0.6 percent to $3.4975 a bushel at 1:09 p.m. Singapore time in electronic trading after gaining 0.4 percent yesterday. The contract touched $3.42 on Feb. 20, the lowest for a most-active contract since Dec. 12. Corn is still down 56 percent from a record $7.9925 on June 27.

Soybeans for May delivery lost 0.2 percent to $8.7425 a bushel after adding 1.5 percent yesterday. The contract is down 47 percent since reaching a record $16.3675 in July and on Feb. 20 touched $8.5425, the lowest since Dec. 16.

The MSCI Asia Pacific Index fell as much as 2.5 percent to 74.33, heading for the lowest close since August 2003. The S&P 500 declined 3.5 percent to its lowest close since April 1997. The six-day losing streak in the U.S. stock benchmark ranks as its longest since October.

Oil Drops

Crude oil for April delivery fell as much as 2.1 percent to $37.65 a barrel in electronic trading on the New York Mercantile Exchange and was at $38.07 at 1:26 p.m. Singapore time. A decline in crude oil may reduce demand prospects for corn and soybeans as a source for biofuel.

The U.S. Department of Agriculture inspected 26.4 million bushels of corn for export in the week ended Feb. 19, down 24 percent from the previous week and 49 percent a year earlier, the USDA said yesterday in a report. Inspections for soybeans were 27.5 million bushel, down 43 percent from the previous week, the USDA said.

The USDA inspected 10.03 million bushels of wheat for export in the week, down 5.5 percent from the previous week and 48 percent from a year earlier, it said.

Wheat for May delivery was 0.1 percent lower at $5.2075 a bushel at 1:24 p.m. Singapore time after losing 1.7 percent yesterday. The contract on Feb. 20 touched $5.15, the lowest since Dec. 16, and has dropped 62 percent from a record $13.495 in February 2008.

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