Soybeans Drop to 8-Week Low as Global Demand Slows; Corn Steady

Feb. 18 (Bloomberg) -- Soybeans fell to the lowest price in eight weeks on speculation that the slumping global economy will slash demand for food, livestock feed and biofuel. Corn was unchanged as farmers withheld supplies from last year’s crop.

Former Federal Reserve Chairman Alan Greenspan said the U.S. may be doing too little to fix its financial system after President Barack Obama yesterday signed into law a $787 billion economic stimulus package. The Reuters/Jefferies CRB Index of 19 raw materials and the MSCI World Index of stocks declined. Soybeans are down 46 percent from a record in July, and corn has plunged 56 percent from an all-time high in June.

“It’s all about the continued downward spiral in demand for homes, cars and commodities,” said Greg Grow, a director of agribusiness at Archer Financial Services in Chicago. “This is like nothing most people have ever seen.”

Soybean futures for May delivery fell 18 cents, or 2 percent, to $8.865 a bushel on the Chicago Board of Trade, the sixth straight decline. Earlier, the price touched $8.845, the lowest for a most-active contract since Dec. 23. Soybeans reached a record $16.3675 on July 3.

U.S. builders broke ground in January on the fewest houses on record as a lack of credit and plunging sales exacerbated the worst real-estate slump since the Great Depression, government data showed today.

“It was the housing market that started this whole mess, and until it is fixed, economic conditions will be difficult to improve upon,” said Jim Gerlach, the president of A/C Trading in Fowler, Indiana.

Animal-Feed Demand

Soybeans also fell and corn erased earlier gains on speculation that demand for livestock feed will decline. Yesterday, hog futures plunged the most in almost a year after Smithfield Foods Inc., the world’s largest pork processor, said it plans to close six plants.

Meatpackers processed 9.86 million hogs last month, 11 percent less than a year earlier, U.S. Department of Agriculture data show. The U.S. may produce 1.6 percent less pork in 2009 than in 2008, the agency estimated.

“The Smithfield announcement was a surprise and may indicate bigger problems ahead,” Grow said. “It’s still about the fear of deflation.”

Corn Unchanged

Corn was unchanged after futures earlier fell to a nine-week low, encouraging farmers to withhold inventories of the grain harvested last year.

The average U.S. cash corn price yesterday fell to the lowest since Dec. 11, data from the Minneapolis Grain Exchange show. The discount for cash corn in Iowa compared with Chicago futures fell to 6.55 cents a bushel from 39.3 cents on Jan. 2, signaling tighter stockpiles of grain available for producers of livestock feed and ethanol, USDA and exchange data show.

“Farmers are going to keep the crops in the bin and wait for a spring-planting rally,” said Robert Utterback, the chief executive officer for Utterback Marketing Services in Lafayette, Indiana. “I’m concerned farmers have too much left to sell and are hoping for a rally.”

Corn futures for March delivery were unchanged at $3.4925 a bushel in Chicago. The price touched $3.46, the lowest for a most-active contract since Dec. 12. Corn reached a record $7.9925 on June 27.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, followed by soybeans at $27.4 billion, government figures show.