Oct. 27 (Bloomberg) -- Soybeans and corn rose the most in more than two weeks as European leaders agreed to boost the region’s rescue fund in a bid to stem the debt crisis, bolstering prospects for commodity demand.
The MSCI All-Country World Index jumped as much as 4.8 percent, and the euro rose to a seven-week high against the dollar, after European leaders agreed to expand a bailout fund to about 1 trillion euros ($1.4 billion). The U.S. economy grew at a 2.5 percent annual rate in the third quarter as household spending gained 2.4 percent, more than forecast, the government reported today.
“Europe has avoided a default disaster for now, and the short-term trend is to buy riskier assets including the grains,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “Improved consumer spending and a weaker dollar may help to boost overseas buying. Export demand needs to improve to sustain the rally.”
Soybean futures for January delivery rose 2 percent to close at $12.44 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain since Oct. 11.
Corn futures for December delivery climbed 2.2 percent to $6.515 a bushel in Chicago, the biggest gain since Oct. 11. The price rallied 1.4 percent last week, the third straight advance, as U.S. farmers withheld supplies after prices plunged 23 percent in September.
The commodities also rose today on speculation that U.S. production will be less than forecast earlier this month, because dry, cold weather damaged crops in September, Schultz said.
Farmers will harvest 12.433 billion bushels of corn this year, less than the 12.497 billion forecast in September and 0.1 percent smaller than last year’s crop, the U.S. Department of Agriculture said on Oct. 12. Soybean production this year will decline 8.1 percent to 3.06 billion bushels from a year earlier, the government said earlier this month. The USDA is scheduled to update its forecasts on Nov. 9.
“People are beginning to position themselves for a smaller crop forecast,” Schultz said. “Farmers continue to report disappointing harvest results.”
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show.
--Editors: Steve Stroth, Millie Munshi
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