Corn Drops as Gain to 10-Week High Seen Excessive, Oil Declines

By Jae Hur

April 1 (Bloomberg) -- Corn declined on speculation that a rally to a 10-week high was excessive and a drop in crude oil prices may reduce demand for the crop as a source of alternative fuel. Wheat also slumped, while Soybeans extended gains.

Crude oil lost as much as 2.8 percent to trade at less than $49 a barrel. Corn gained 4.8 percent yesterday after touching $4.06 a bushel, the highest since Jan. 20. Soybeans added 5.3 percent, the biggest advance since Oct. 29. Wheat jumped 4 percent, the most in almost two weeks.

“Both Wall Street futures and oil prices are sharply lower, while the dollar has recovered yesterday’s decline,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “This is encouraging profit-taking across the grains following Tuesday’s post-report rally in the complex.”

Corn for May delivery fell as much as 1.4 percent to $3.99 a bushel in electronic trading on the Chicago Board of Trade and was at $3.9925 at 2:25 p.m. Singapore time. The most-active contract, which rose 13 percent in March, declined 0.6 percent in the first quarter, the third straight drop.

Soybeans for May delivery was up 0.3 percent $9.5525 a bushel after losing as low as $9.43 earlier. The oilseed climbed 9.2 percent in March. In the quarter, the price fell 2.9 percent, the third straight drop.

Corn jumped yesterday after a U.S. government report showed demand for the grain used in livestock feed was higher than forecast in the three months ended Feb. 28.

Stockpiles as of March 1 increased 1.5 percent to 6.958 billion bushels from a year ago, the Department of Agriculture said yesterday. Analysts surveyed by Bloomberg News forecast an average 7.012 billion.

Soybean Planting

Soybeans climbed yesterday as the U.S. Department of Agriculture report showed farmers intend to plant fewer acres of the oilseed than analysts expected.

Soybean acres will rise 0.4 percent to a record 76.024 million from a year ago, the USDA said. Analysts in a Bloomberg News survey forecast a 4.5 percent gain.

U.S. farmers will pare corn acreage by 1.2 percent to 84.986 million from a year ago, the USDA said. Analysts in the Bloomberg survey expected 1.5 percent decline in corn plantings as record fertilizer costs spurred a shift to less-costly soybeans.

Argentine farm groups failed to reach an agreement with the government over farm taxes after the two sides met to resolve a year-long conflict. The government reiterated its decision to maintain soybean taxes at 35 percent, said Interior Minister Florencio Randazzo. Farmers will lobby lawmakers to reach a quorum required to debate the issue in Congress.

Farmers went on strike last week, blocking highways in a year-long protest over taxes and overseas export restrictions. They are limiting sales of their produce as part of the protest.

May-delivery wheat fell as much as 1.7 percent to $5.235 a bushel and was at $5.265 at 2:30 P.m. Singapore time. The price fell 13 percent in the first quarter, the fourth straight drop.

U.S. farmers intend to plant the grain on 58.638 million acres this year, down 7.1 percent from 2008, the USDA said yesterday. Rain and snow in the northern Great Plains has caused flooding and muddied fields, possibly delaying the start of spring-wheat seeding next month.

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