Corn, Soybeans Gain as Higher Crude May Increase Biofuel Demand

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Agriculture - Global Trends

Corn and soybeans advanced, paring declines of as much as 3.5 percent yesterday, on speculation strengthening crude oil prices will boost demand for biofuel. Corn gained 0.2 percent to $3.9775 a bushel after slumping 3.2 percent yesterday as the dollar increased 1 percent against a basket of six major currencies. Soybeans rose 0.6 percent to $10.3650 a bushel following a 3.5 percent drop yesterday. Crude oil traded around $73 a barrel and was poised for its biggest weekly gain since October on optimism fuel demand will increase because of a strengthening economic recovery. “The high openings in the weak market today reflect the technical rebound after a steep decline yesterday,” Luke Mathews, commodity strategist at Commonwealth Bank of Australia, said from Sydney. “Crude oil prices also support the market.” The most active corn contract had its biggest drop yesterday since Oct. 30 while soybeans had their largest decline since Oct. 2. Soybeans had rallied 3.9 percent over four straight sessions to Dec. 16 on increasing export sales to China, the biggest global consumer of the oilseed. Wheat for March delivery rose 0.6 percent to $5.2150 a bushel at 11:32 a.m. in Singapore, after plunging 3.5 percent yesterday to $5.1850 a bushel on the Chicago Board of Trade, the steepest drop for a most-active contract since Nov. 24. “The dollar is the main factor driving investors away from commodities,” Jonathan Barratt, managing director of Commodity Broking Services Pty, said from Sydney. Dalian soybean futures declined as much as 2.6 percent from the previous settlement price to 3,935 yuan ($532) a metric ton, the lowest level since Dec. 14. The September-delivery contract traded at 3,947 yuan at 11:15 a.m. in Singapore.

Source: Bloomberg

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