Soybeans, corn gain on lift in demand

09:12, January 05, 2010      

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Corn, soybeans and wheat rallied on speculation that fund managers will buy agricultural commodities at the start of this year on improving demand as the global economy recovers.

Corn will average $4.60 a bushel this year, 11 percent more than the closing price on Dec 31, said Emmanuel Jayet, head of agricultural research at Societe Generale in Paris and the most accurate forecaster based on estimates compiled by Bloomberg at the end of 2008.

"With the start of the new year, buying from investment funds, especially index funds, looked strong for the grains and oilseed complex, which lagged behind last year's gains among commodities," said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co.

Corn for March delivery gained as much as 1.3 percent to $4.1975 a bushel, the highest price since Dec 1, on the Chicago Board of Trade and traded at $4.19 as of 1:46 pm in Tokyo. The price gained 1.8 percent last year after slumping 11 percent in 2008.

March-delivery soybeans climbed as much as 1.3 percent to $10.625 a bushel, the highest level since on Dec 17, before trading at $10.5875. The oilseed rose 7 percent last year following a 19 percent drop in 2008.

Corn has also been supported by speculation that a government estimate of the US crop will fall after snow and ice hurt late-harvested crops, while soybeans have been underpinned by demand from China, the world's top buyer of the oilseed, Kawanabe said.

Commodity forecasts

Raw materials may return more than financial assets for the first time in three years as the global economy rebounds, according to Bloomberg surveys and 2009's most accurate commodity forecasters.

The S&P GSCI Enhanced Total Return Index of 24 commodities will gain 17.5 percent, Goldman Sachs Group Inc estimates.

That'll beat an 11 percent jump in the Standard & Poor's 500 Index and a 2.8 percent return on the benchmark US 10-year note, according to forecasts compiled by Bloomberg.

The 3.1 percent global expansion forecast by the International Monetary Fund in October also means demand for food will rise.

A United Nations index of 55 food commodities advanced for four consecutive months through November. Shortages sparked riots in nations such as Haiti and Egypt in 2008.

Wheat for March delivery rose as much as 1.6 percent to $5.50 a bushel and traded at $5.49 at 1:51 pm in Tokyo. The price dropped 11 percent last year.

Source: China Daily
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