Oct. 26 (Bloomberg) -- Corn fell from near a two-year high and soybeans dropped from 16-month peak as a stronger dollar reduced investment demand for some commodities. The dollar rose as much as 0.8 percent against a basket of six major currencies, making U.S. grain less appealing for overseas buyers. Hedge funds increased bets on higher soybean prices by 12 percent last week to a record, government data show. Speculators held the third-biggest bet on rising corn prices. "The dollar's rally is shifting speculative money out of the grain markets," said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. "The dollar rebound is providing an incentive to cut long positions," or bets on higher prices, Grow said. Corn futures for December delivery fell 1.5 cents, or 0.3 percent, to $5.6725 a bushel at 10:08 a.m. on the Chicago Board of Trade. The price, which rose 33 percent in the third quarter, reached a two-year high of $5.88 on Oct. 13 after the government reduced its estimate of this year's U.S. crop. Soybean futures for January delivery dropped 4 cents, or 0.3 percent, to $12.26 a bushel on the CBOT. Yesterday, the commodity reached $12.255, the highest price since June 2009. Before today, the oilseed, used to make animal feed and cooking oil, rose 36 percent since the end of June. Corn rose to a record $7.9925 on June 27, 2008, and soybeans reached an all-time high of $16.3675 on July 3, 2008. Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.

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