Corn Heads for Weekly Gain on Crude Oil Rally, Dollar Weakness

By Jae Hur

Aug. 14 (Bloomberg) -- Corn headed for its second weekly gain in three as rising crude oil prices and a weaker dollar increased the grain’s appeal to investors and purchasers outside the U.S.

Futures have gained 1.7 percent this week as a three-day rally in oil prices made the grain more attractive as a source of biofuel. The Dollar Index, a six-currency gauge of the greenback’s strength, fell for a fourth day, boosting demand from overseas importers holding other currencies.

“Corn and soybeans got a boost from higher oil prices and the dollar’s weakness,” Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., said today. “Favorable crop weather in the U.S. Midwest may limit further gains in the grain and oilseed complex.”

Corn for December delivery was unchanged at $3.32 a bushel at 1:52 p.m. in Singapore after gaining as much as 1.1 percent earlier in after-hours electronic trading on the Chicago Board of Trade.

The grain dropped 1.3 percent yesterday on speculation warm, wet weather in the U.S. would boost the crop before farmers begin harvesting next month.

Crude oil for September delivery rose 0.4 percent to $70.83 a barrel on the New York Mercantile Exchange. The Dollar Index slipped to 78.456 after declining to 78.235 yesterday, the lowest level since Aug. 7.

U.S. exporters reported sales of 116,000 metric tons of corn to South Korea, the U.S. Department of Agriculture said yesterday. The corn is for delivery in the year that begins Sept. 1, the USDA said.

Favorable Weather

Soybeans for November delivery dropped 0.6 percent to $10.13 a bushel after trading between $10.01 and $10.31. The oilseed lost 2.4 percent yesterday and has lost 2.5 percent this week, headed for its first decline in three weeks.

Warm temperatures and mostly adequate soil moisture favors late pollinating and filling corn in the U.S. Midwest and increases crop development, weather forecaster DTN Meteorlogix LLC said in a report yesterday. The weather also favors pod setting and filling soybeans.

Wheat for December delivery in Chicago slipped 0.3 percent to $5.08 a bushel after losing 1.6 percent yesterday as favorable weather improved prospects for the spring crop in the U.S. The contract declined 1.6 percent this week, extending last week’s 2.2 percent drop.

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