Bloomberg News

Corn, Soybeans Fall on Speculation Dollar Rally Will Curb Demand

November 01, 2011

Oct. 31 (Bloomberg) -- Corn fell for the first time in three sessions and soybeans dropped to the lowest price in almost three weeks as a rally in the dollar eroded prospects for U.S. exports and reduced the investment appeal of commodities.

The dollar advanced against all its major peers after MF Global Holdings Ltd. was suspended from conducting new business with the New York Federal Reserve and the Chicago Mercantile Exchange limited the firm’s customer trading to liquidation only. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.7 percent amid concern European leaders will struggle to contain the region’s debt crisis.

“Concern about erosion of demand is weighing on the markets,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The uncertainty about European debt and the MF Global situation boosted the dollar and shifted the flow of money away from riskier assets.”

Corn futures for December delivery fell 1.2 percent to close at $6.47 a bushel at 1:15 p.m. on the Chicago Board of Trade. The decline pared this month’s gain to 9.2 percent, reflecting speculation that demand would improve after prices on Oct. 3 touched the lowest since December.

Soybean futures for January delivery declined 0.7 percent to $12.1725 a bushel on the CBOT, after touching $12.035, the lowest since Oct. 11. The oilseed rose 3.2 percent in October as demand improved after prices plunged 19 percent in September.

The U.S. is the largest producer and exporter of both crops. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show

--Editors: Steve Stroth, Patrick McKiernan

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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