Wheat, Soybeans Gain as Dubai Debt Concerns Ease, Dollar Drops

By Luzi Ann Javier

Nov. 30 (Bloomberg) -- Wheat jumped as much as 1.9 percent and soybeans gained as the dollar declined after the United Arab Emirates’ central bank eased credit, boosting optimism the impact of Dubai World’s possible default may be limited.

The U.A.E. central bank yesterday said it “stands behind” the nation’s local and foreign banks and offered them access to more money under a new facility as they face losses from Dubai World’s debt.

“The stance that they have stated they will take should further calm markets’ nerves,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney today. “The developments in Dubai have certainly added to the volatility in agricultural commodity markets.”

Wheat for March delivery gained 12 cents to $5.8175 a bushel on the Chicago Board of Trade at 3:59 p.m. Singapore time. The contract fell 1.9 percent last week as Dubai’s bid to reschedule debt eroded investor confidence in commodities and boosted the dollar.

Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities until at least May 30, 2010. That raised the prospect of rising loan losses for U.A.E. and foreign banks.

Soybeans for January delivery added as much as 1.2 percent to $10.66 a bushel and last traded at $10.645.

The Dollar Index, which tracks the value of the greenback against six major currencies including the euro and the yen, fell 0.6 percent to 74.564 at 3:01 p.m. Singapore time.

U.S. ‘Struggling’

A weaker dollar makes U.S. supplies more attractive to importers and investors as it makes commodities cheaper for holders of other currencies.

Rising global wheat stockpiles may curb gains in prices of the grain because “the U.S. is still struggling to compete” with other exporters, Commonwealth Bank’s Mathews said.

Wheat exports from Ukraine expanded to 5.4 million metric tons so far in the marketing year that began July 1, from 5.2 million tons in the same period last year, UkrAgroConsult, a Kiev-based Researcher, said Nov. 24. Ukraine is the world’s fifth-largest exporter, according to the U.S. Department of Agriculture.

Soybeans for September delivery jumped as much as 3.3 percent to 4,066 yuan ($596) a ton on the Dalian Commodity Exchange. That’s the highest price for the most-active contract since Sept. 2008. The contract closed 2.4 percent higher at 4,030 yuan.

China Subsidy

China, the world’s largest soybean importer, said Nov. 27 it will buy soybeans and corn from northeastern areas of the country from Dec. 1 through April 30 and will offer crushers a one-off subsidy of 160 yuan per ton to purchase local beans.

Fourteen of 27 traders and analysts surveyed on Nov. 27 from Tokyo to Chicago said corn and soybean prices will rise this week, on speculation commodity investments will increase at the start of December as rain and snow reduce yields in the U.S., the world’s biggest grower and exporter of both crops.

Major U.S. growing states including Iowa, Illinois, Nebraska, Minnesota and Indiana were forecast to have below- normal temperatures between Dec. 5 and Dec. 13, the U.S. Climate Prediction Center said Nov. 29.

“What the U.S. farmers need at the moment is dry and warmish weather for the completion of their harvest,” Mathews said. Cold weather “may weigh on prices there.”

Corn Demand

About 68 percent of the corn crop in the 18 largest U.S. producing states had been harvested as of Nov. 22, compared with 87 percent a year earlier and an average of 94 percent in the past five years, the U.S. Department of Agriculture said Nov. 23. About 94 percent of soybeans had been collected in the same period, compared with 97 percent a year earlier, it said.

Corn for March delivery was little changed at $4.14 a bushel at 3:02 p.m. Singapore time.

Corn may lead an advance in grains and oilseed markets in Chicago this week on optimism demand may be stronger than expected, Mathews said.

The USDA said last week exporters sold 1.22 million tons of corn in the week ended Nov. 19, more than triple the volume a week earlier. An additional 402,900 tons were sold for delivery in the next marketing year beginning Sept. 1, it said.

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