Soybean, Corn Futures Drop in Chicago as Crude Oil Declines

By Luzi Ann Javier

July 13 (Bloomberg) -- Soybean and corn futures fell in Chicago as a drop in crude oil reduced the appeal of alternative fuels made from crops and favorable weather boosted supply prospects in the U.S.

Crude oil fell as much as 1.6 percent to $58.92 a barrel in New York on concern the global recession will sap demand for fuel and increase stockpiles. The Midwest, the largest corn and soybean growing region in the U.S., will have temperatures warming to above-normal levels, Meteorlogix LLC said in its 10- day weather outlook released July 11.

The decline in crude oil was having a “spill-over effect” on the grain and oilseed market, Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney said by phone today. “There’s nothing really too threatening in the longer-term forecast,” he said, referring to the weather outlook for the crop-growing areas.

Soybeans for November delivery, after the U.S. harvest, fell as much as 0.8 percent to $9.095 a bushel in after-hours electronic trading on the Chicago Board of Trade, and traded at $9.0975 a bushel at 2:21 p.m. Singapore time. The contract earlier gained as much as 1.3 percent. Soybean oil, crushed from the oilseed, can be processed into biodiesel.

Concerns that global soybean supplies may decline in the next marketing year have eased after the U.S. Department of Agriculture raised its harvest estimate for the world’s biggest grower and exporter of the oilseed, Hassall said.

Soybean Production

U.S. production was forecast at 3.26 billion bushels in the July 10 report, up 2 percent from the June estimate, as the planted area expanded.

Corn for December delivery fell as much as 1.9 percent to $3.315 a bushel in Chicago before trading at $3.3225. The most- active contract earlier rose as much as 0.5 percent. Corn can be processed into ethanol, used to stretch gasoline supplies.

Wheat for September delivery advanced as much as 1.6 percent to $5.27 a bushel in Chicago before trading at $5.2125 a bushel.

Wheat futures gained as investors bought contracts after prices plunged last week and the U.S. lowered its estimate for 2010 inventories held by the largest exporters.

Stockpiles held by shippers including the U.S. and Canada will total 26.97 million metric tons, the Department of Agriculture estimated, down 12 percent from its June estimate. Hedge-fund managers and other large speculators in the week ended July 7 increased bets prices will fall, boosting their net short positions by 148 percent from a week earlier, the U.S. Commodity Futures Trading Commission said July 10.

“We’re seeing some short covering because the speculators were holding quite a large short position,” Hassall said. Wheat prices may have touched a bottom in the past few weeks, he said.

Wheat rallied 5.1 percent since trading at $4.9575 a bushel on June 30, the lowest since Dec. 12.

To contact the reporter on this story: Luzi Ann Javier in Singapore at javier@bloomberg.net