Corn, Wheat Decline as Stronger Dollar Cuts Investment Demand

By Supunnabul Suwannakij

Dec. 16 (Bloomberg) -- Corn fell for a second day as a stronger dollar reduced investment demand for commodities and curbed U.S. farm export prospects.

The dollar traded near a two-month high against the euro amid speculation the Federal Reserve may withdraw stimulus measures and increase borrowing costs because of signs the U.S. economic recovery is gaining momentum.

“A substantially stronger dollar has negative impacts on Chicago grain markets,” Toby Hassall, a research analyst at CWA Global Markets Pty, said today by phone from Sydney.

Corn for March delivery on the Chicago Board of Trade fell 0.4 percent to $4.06 a bushel at 3:25 p.m. in Singapore, extending yesterday’s 0.2 percent decline. The price advanced 6.5 percent in the three days ending Dec. 14 on concerns that the crop in the U.S. would be damaged by adverse weather.

Snow, rain and high winds continued to delay the slowest U.S. corn harvest since at least 1986, according to the Department of Agriculture.

The USDA forecast the crop at 12.921 billion bushels, second only to the harvest of 2007. The estimate will be updated on Jan. 12.

Wheat declined as the stronger dollar may hurt exports by the U.S., the world’s largest shipper. The March-delivery contract fell 0.4 percent at $5.345 a bushel at 3:24 p.m. in Singapore, after dropping 1.2 percent yesterday.

The dollar traded at $1.4541 per euro at 3:27 p.m. in Singapore from $1.4538 in New York yesterday when it reached $1.4504, the strongest level since Oct. 2.

Global Supply

India, the world’s second-biggest wheat grower, may have “better” production than last year as sowing of the nation’s biggest winter-sown crop progresses well, Junior Farm Minister K.V. Thomas said.

“Overall situation in planting of wheat, rice and lentils is good,” Thomas told reporters in New Delhi today.

Wheat and corn should remain “fairly range-bound” in the near term amid prospects for South American crops to increase global supply levels, CWA Global’s Hassall said.

Argentine corn output will rise to 14 million metric tons next year from 13.2 million tons in the past February- August harvesting season, Martin Fraguio, executive director of growers association Maizar, said yesterday.

Soybeans Gain

March-delivery soybeans gained 0.3 percent to $10.6475 a bushel at 3:02 p.m. in Singapore. The contract reached $10.7475 in Chicago yesterday, the highest price since Dec. 1 on rising demand.

U.S. exporters sold 290,000 tons to China for delivery before Sept. 1, the Department of Agriculture said yesterday. Cumulative U.S. sales to all customers from Sept. 1 to Dec. 3 were up 56 percent from a year earlier. U.S. processors used 4.36 million tons last month, up 15 percent from a year earlier, an industry group said Dec. 14.

China’s soybean imports in December may be nearly 4.9 million tons, the China National Grain & Oils Information Center said today in an e-mailed statement.

Imports reached a record 4.71 million tons in June, according to Bloomberg data. China, the world’s largest soybean buyer, increased imports for the first time in five months in November when shipments increased by 15 percent from a month earlier to 2.89 million tons, the Beijing-based customs office said on Dec. 11.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net