By Luzi Ann Javier June 4 (Bloomberg) -- Corn futures may advance on speculation that the biggest oil spill in U.S. history will spur stricter regulations on offshore drilling, boosting demand for biofuels, and as recent declines lure buyers. July delivery corn was unchanged at $3.495 a bushel, declining 2.4 percent for the week, the second straight fall. “The Gulf spill should see the production of cleaner fuels accelerate,” Jonathan Barratt, managing director at Commodity Broking Services Pty, said in an e-mail. Increased biofuel demand will support corn, used in ethanol production, and soybeans, used to make biodiesel, he said. Wheat, used to replace corn in animal feeds, will also be supported, he said. The U.S. is “pulling back” exploration plans and requiring oil and gas producers seeking to drill in the Gulf of Mexico to resubmit plans to “ensure that new safety standards and risk considerations are incorporated,” Bob Abbey, acting director of the Minerals Management Service, said June 2. The U.S. government suspended oil exploration and canceled pending lease sales after an explosion at a drilling rig owned by BP Plc unleashed as many as 19,000 barrels of oil a day. Nonghyup Feed Inc., South Korea’s biggest buyer of feed grains, is seeking to purchase as much as 165,000 tons of corn for arrival between October and November, according to a notice. The company also seeks between 45,000 tons and 55,000 tons of feed wheat for arrival in October, the notice said. Feedmill Tender South Korea’s Major Feedmill Group bought 110,000 tons of corn from Cargill Inc. for arrival in October via a tender, according to three industry executives who took part in the bidding late yesterday. Higher exports and ethanol production may prompt the U.S. Department of Agriculture to pare its estimate for corn inventory in the U.S., the largest exporter, to 1.698 billion bushels by Aug. 31, the end of the marketing year and before this year’s harvest, from an earlier outlook of 1.738 billion bushels, Joe Victor, vice-president at Allendale Inc., farm marketing adviser and brokerage, said in an e-mail yesterday. The inventory may be at 1.768 billion bushels next year, compared with USDA’s estimate of 1.818 billion bushels, he said. Wheat for July delivery advanced 0.2 percent to $4.425 a bushel at 4:27 p.m. Singapore time, paring the weekly loss to 3.3 percent. Shipments of U.S. wheat may have been between 200,000 tons to 450,000 tons in the week ended May 27, from 176,969 tons a year earlier, according to estimates of analysts surveyed by Bloomberg News. Corn exports may have been between 600,000 tons to 1.3 million tons, compared with 604,484 tons a year earlier, the survey showed. The USDA will release its export sales report at 8:30 a.m. in Washington D.C. Soybeans for July delivery lost 0.2 percent to $9.5275 a bushel, trimming the weekly gain to 1.6 percent, the first in six weeks. The soybean inventory estimate for the U.S., the world’s largest grower and exporter, may be lowered to 179 million bushels before the harvest, from an earlier USDA forecast of 190 million bushels, Victor said. The inventory may be at 349 million bushels next year, compared with USDA’s earlier estimate of 366 million bushels, he said. The USDA will release its latest outlook on June 10 in Washington D.C. Allendale predicted the USDA will keep its U.S. wheat stockpile estimate at 950 million bushels before the harvest, and said next year’s inventory of the grain will be 974 million bushels, compared with the USDA estimate of 997 million bushels. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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