SF: Corn, Soybeans, Wheat Jump as Weakening Dollar Boosts Demand
Oct. 25 (Bloomberg) -- Corn, soybeans and wheat rose in Chicago on speculation that the dollar's drop may bolster demand for U.S. crops. Rice touched the highest price since January.
Corn for December delivery gained 2.2 percent to $5.725 a bushel on the Chicago Board of Trade at 12:53 p.m. Paris time. January-delivery soybeans climbed 1.5 percent to $12.2975 a bushel. The most-active contract touched $12.35 on Oct. 21, the highest level since June 5, 2009. The grain and the oilseed both advanced for the first day in three.
The dollar's "weakness makes U.S. grains cheaper on the world market and, all other things being equal, shall bring buyers to the CBOT," economist Dennis Gartman wrote in his daily newsletter.
The dollar fell for a second day against the euro after a Group of 20 pledge to avoid "competitive devaluation" damped speculation governments around the world will buy the U.S. currency to weaken their monies. A slumping dollar makes crops from the U.S. cheaper in terms of other monies and stokes demand for raw materials as an alternative investment.
"The dollar's weakness has boosted overall commodities, including Chicago grains and oilseeds," Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., said today. Corn and soybeans also benefited from the outlook for demand from China, he said.
Survey of Traders
Corn and soybeans may rise this week on speculation that the U.S. Department of Agriculture will cut forecasts for this year's crops. Seventeen of 33 traders and analysts surveyed from Chicago to Tokyo on Oct. 22 said corn will climb, and 18 of 34 respondents said soybeans will advance.
Soybean imports by China may reach 60 million metric tons in the 2010-2011 marketing year on strong crushing margins, the China National Grain & Oils Information Center said, citing global grain trading companies it didn't identify. That's more than the 55 million tons estimated by the USDA on Oct. 8.
China's soybean crushers have accelerated buying of South American new-crop soybeans, the center said in a report on its website today. Crushers have ordered 5 million tons of the oilseed from South America to date, 25 percent more than a year ago, it said.
Wheat for December delivery climbed 1.1 percent to $6.78 a bushel after falling 4.8 percent last week, the second straight weekly decline. Prices have surged 41 percent since the end of June after drought destroyed Russian crops.
Export Ban
The grain rallied from a two-week low on Oct. 22 after Russia lengthened its ban on cereal exports to preserve domestic supply. Russia, the world's third-largest wheat producer last year, extended the ban until July 1, Prime Minister Vladimir Putin said Oct. 22. The country said in August it would halt exports until the end of this year.
Milling wheat for January delivery traded on NYSE Liffe in Paris rose 0.6 percent to 209 euros ($293.27) a ton.
Global wheat stockpiles will total 174.66 million tons at the end of the 2010-2011 marketing year, down 11 percent from last year, the USDA said Oct. 8.
Rough rice for January delivery advanced for a 10th day in Chicago, gaining 2 percent to the day's high of $14.81 per 100 pounds, the highest level since Jan. 12.
Thailand's main rice harvest may drop as much as 20 percent to less than 20 million tons after the worst floods in four years, Banjong Tungjitwattanakun, vice president of the Thai Rice Mills Association, said Oct. 20. The main crop, harvested from October to April, typically accounts for 75 percent of annual output.
"The world's rice crop has been very materially reduced due to weather problems," Gartman said. "Rice prices have risen very sharply of late, and we do not wish to buy this strength, but we must be on our guard to buy any reasonable corrections that come our way" in coming weeks, he said.
Japan is seeking up to 80,000 tons of foreign rice in a tender on Oct. 29, the Ministry of Agriculture, Forestry and Fisheries said today.
--With assistance from Luzi Ann Javier in Singapore, Yasumasa Song and Aya Takada in Tokyo, Jeff Wilson in Chicago and William Bi in Beijing. Editors: Dan Weeks, Nicholas Larkin.
