Soybeans Rise as Investors Judge Recent Declines as Excessive

By Luzi Ann Javier

Nov. 6 (Bloomberg) -- Soybeans rose as investors judged the drop in the past two days as excessive and higher crude oil prices boosted prospects for crops used in biofuels.

Soybean futures fell 3.8 percent in the past two days and corn futures lost 3.5 percent on speculation warmer, drier weather in the U.S. Midwest will help accelerate harvesting in the largest exporter of both crops. Crude oil traded near $80 a barrel in New York on optimism demand will rise amid improved prospects for an economic recovery in the U.S.

“There’s been heavy selling in the market” Tetsu Emori, a commodity fund manager at Astmax Co., said by phone from Tokyo today, referring to soybeans, corn and wheat. Some investors are covering their short positions, or bets prices will fall, helping support prices, he said.

Soybeans for January delivery rallied as much as 1.1 percent to $9.825 a bushel in after-hours electronic trading on the Chicago Board of Trade before trading at $9.805 at 2:06 p.m. Singapore time. Soybeans yesterday had the biggest drop for the most-active contract in almost five weeks.

Corn for December delivery was little changed at $3.7675 a bushel, after gaining as much as 0.5 percent earlier. The most- active contract, which closed 2 percent lower yesterday, is headed for a 2.9 percent gain this week.

Wheat Declines

December-delivery wheat fell 0.2 percent to $5.115 a bushel, trimming the weekly gain to 3.5 percent.

Higher crude oil boosted demand prospects for corn, processed into ethanol to stretch gasoline supplies, and soybean oil, used to make biodiesel, Emori said.

Denatured ethanol for December delivery added 0.1 percent to close at $1.867 a gallon on the Chicago Board of Trade yesterday, as its discount to gasoline encouraged refiners and blenders to boost usage.

Still, drier, warmer weather in the Midwest, the largest U.S. growing region, may accelerate harvesting, lowering the risk of frost damage and damping prices, Emori said.

“Good production in the U.S. would ease the supply tightness in the oilseed and grain market,” he said.

Global stockpiles of all major oilseeds including soybeans were estimated to drop 12 percent to 55 million tons before the start of the 2009-2010 marketing year, from a year earlier, as production lags behind demand, according to a U.S. Department of Agriculture forecast on Oct. 9.

The USDA forecast in October that the nation’s soybean output will rise to a record 3.25 billion bushels from 3.245 billion bushels it estimated a month earlier.

It also increased in October its U.S. corn output estimate to 13.018 billion bushels, the second-largest on record, from 12.955 billion bushels a month earlier.

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