By Jeff Wilson
July 1 (Bloomberg) -- Soybeans rose the most in almost four weeks and corn gained on speculation that recent declines, driven by favorable crop weather in the U.S. Midwest, went too far and will boost demand for supplies from the region.
Corn fell 17 percent last month, the steepest monthly drop since September, ending down 54 percent from the June 2008 record. Before today, soybeans plunged 21 percent from a nine- month high on June 5. U.S. soybeans are cheaper for importers than supplies from Brazil, said Roy Huckabay, a Linn Group executive vice president in Chicago.
“U.S. soybeans are more competitive and that means we will sell more overseas,” reducing inventories already predicted to fall to a 32-year low, Huckabay said in a telephone interview. “The break in prices has encouraged corn-buying from ethanol makers and some feed-buying from livestock producers.”
Soybean futures for November delivery rose 34.5 cents, or 3.5 percent, to $10.155 a bushel on the Chicago Board of Trade, the biggest gain since June 4. Soybeans reached a nine-month high $12.365 on June 5.
Corn futures for December delivery rose 2 cents, or 0.5 percent, to $3.6925 a bushel in Chicago. The most-active contract, which plunged the 30-cent exchange limit yesterday, reached a seven-month high of $4.50 on June 2 as cold, wet weather in the U.S. Midwest threatened to reduce crop yields.
Profits for ethanol plants in Iowa and Illinois have reached 18 cents a gallon, up from losses as recently as May 7, said Ag Trader Talk, an online grain information service in Clive, Iowa. Crude oil jumped 41 percent in the second quarter.
Shrinking Soybean Inventories
Domestic soybean stockpiles may reach a 32-year low of 110 million bushels on Aug. 31, before the next harvest, the U.S. Department of Agriculture said last month. As of June 1, 597 million bushels remained in reserves from last year’s crop, down 12 percent from a year earlier, the USDA said yesterday.
“It’s still a tight supply and falling prices don’t slow consumption,” Huckabay said.
Prices also rose after the dollar fell against 14 of 16 major currencies as U.S. and Chinese factory reports added to evidence that a global slump is easing, bolstering food, animal- feed and fuel demand, said Mike Zuzolo, the president of Risk Management Commodities Inc. in Lafayette, Indiana.
“The dollar weakness helped to bring in some new index- fund buying,” Zuzolo said.
Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, with soybeans in second place at a record $27.4 billion government figures show. The U.S. is the largest producer and exporter of both crops.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
Last Updated: July 1, 2009 16:55 EDT
