Corn, Soybeans Plunge as Dimming Economic Outlook Curbs Demand

September 22nd, 2011


Category: Grains, Oilseeds

(Bloomberg) — Corn fell the most in almost a year and soybeans dropped to a six-month low on mounting concern that a slumping economy will curb demand for crops used in food, livestock feed and biofuel.

The Standard & Poor’s GSCI Index of 24 commodities plunged as much as 5.2 percent, led by silver, copper and crude oil. The dollar rose to a seven-month high against a basket of six currencies, eroding the appeal of commodities, after the Federal Reserve said yesterday that the U.S. economy faces “significant downside risks.” Corn exports fell 49 percent in the week ended Sept. 15, the government said today.

“The Fed action pushed the dollar higher and commodities lower on increasing fears that the U.S. economy will slow global growth,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “The perception is the Fed is running out of policy measures to revive the economy.”

Corn futures for December delivery fell 35.75 cents, or 5.2 percent, to close at $6.50 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop since Oct. 1. Earlier, the price touched $6.475, the lowest since July 12. Prices have fallen more than 15 percent since Aug. 31 on slowing demand for shrinking U.S. production.

Soybean futures for November delivery dropped 37.5 cents, or 2.8 percent, to $12.83 a bushel, the eighth decline in nine sessions. Earlier, the price touched $12.81, the lowest since March 15. The oilseed has dropped 12 percent this month as the rising dollar increased demand for cheaper supplies from Brazil and Argentina, the largest exporters after the U.S.

Speculator Holdings

Hedge funds and large commodity traders may have sold 25,000 contracts of corn and 8,000 contracts of soybeans today, according to Charlie Sernatinger, a vice president for ABN Amro Clearing LLC in Chicago.

Hedge-fund managers reduced their bets on higher corn prices by 10 percent in the week ended Sept. 13, from a week earlier, according to U.S. Commodity Futures Trading Commission data. Net-long positions in soybeans fell 8.9 percent, the second straight drop, the agency said in a report.

“We still have plenty of spec longs that are unhappy and getting margin calls, and with the end of the quarter coming up, for many of them, enough was enough,” Sernatinger said today in a note to clients. “Look for more blood in the water before this is done.”

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

To contact the reporter on this story: Jeff Wilson in Chicago at

To contact the editor responsible for this story: Steve Stroth at

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