Corn, Soybeans Jump as Weaker Dollar May Boost Overseas Demand

By Jae Hur

Feb. 23 (Bloomberg) -- Corn advanced and soybeans rallied for the first time in nine days on speculation that the dollar’s decline will help increase buying interest among overseas importers holding other currencies.

The dollar fell for a third day against the euro and Asian stocks rose on speculation the U.S. government will raise its stake in Citigroup Inc. to ease the global financial crisis and revive economic growth. Corn gained as much as 2.3 percent. Soybeans rose as much as 3.8 percent on speculation China may import the oilseed more this year.

“We’re seeing some weakness in the U.S. dollar which is providing support to the grains and oilseeds complex,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “Recent flight-to-safety gains in the dollar have negatively impacted on the competitiveness of dollar- denominated commodities on the world market, adversely impacting prospects for U.S. exports.

Corn for March delivery gained 2.1 percent to $3.5775 a bushel at 3:49 p.m. Singapore time after reaching $3.5825 in electronic trading. The contract touched $3.42 on Feb. 20, the lowest for a most-active contract since Dec. 12, and dropped 3.6 percent last week, the seventh consecutive weekly decline. Futures reached a record $7.9925 on June 27.

Soybeans for May delivery rose as high as $8.9575 and last traded at $8.9325 a bushel, up 3.5 percent. The contract on Feb. 20 touched $8.5425, the lowest since Dec. 16, and lost 9.7 percent last week, the biggest weekly drop since Dec. 5. Prices reached a record $16.3675 in July.

China Imports

China’s soybean imports, the world’s biggest, may rise 0.5 percent to a record 38 million metric tons in the year ending September as the government buys domestic harvest to boost rural incomes, a state-owned market forecaster said.

Purchases may increase by 180,000 tons in the period from a year earlier, the slowest pace in at least three years, the China National Grain and Oils Information Center said in a statement today. The U.S. Department of Agriculture had forecast imports to drop by 1.8 million tons.

The MSCI Asia Pacific Index gained 1.2 percent to 76.91 at 3:52 p.m. in Singapore, having earlier fallen 1.1 percent. The gauge lost 15 percent this year as the worsening economic slowdown hurt corporate profits.

The dollar fell as much as 1.3 percent to $1.2992 per euro, the lowest since Feb. 11, before trading at $1.2963.

Wheat for May delivery was 0.7 percent higher at $5.34 a bushel at 3:51 p.m. Singapore time after trading between $5.265 and $5.37. The contract on Feb. 20 touched $5.15, the lowest since Dec. 16, and fell 0.9 percent last week. Futures reached a record $13.495 in February 2008.

Egypt, the world’s largest wheat importer, purchased 240,000 tons of the grain from Russia at a tender, Nomani Nomani, deputy chairman of the General Authority for Supply Commodities, the main state wheat buyer, said on Feb. 21.

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