Soybeans Rise to Seven-Month High, Corn Gains on Demand Outlook

May 19 (Bloomberg) -- Soybeans rose to a seven-month high and corn gained for the second straight day on speculation that the economy is recovering, boosting demand for the crops.

Crude oil rose to the highest in six months in New York and the MSCI World Index of equities climbed 1.5 percent as investors become more optimistic that the first global recession since World War II is ending. The dollar fell the most against a basket of six major currencies since May 8 as rising confidence in the U.S. banking industry sapped greenback demand.

“Crude strength, dollar softness, and strength in the equity markets carried soybean prices to new highs, while firming corn,” Dale Durchholz, a senior market analyst for AgriVisor LLC, said by e-mail. “As economic confidence grows, there’s movement of investment money back into commodities as a hedge against inflation.”

Soybean futures for July delivery rose 15.5 cents, or 1.4 percent, to $11.62 a bushel on the Chicago Board of Trade. Earlier, the price touched $11.695, the highest for a most- active contract since Sept. 26.

Corn futures for July delivery gained 4.25 cents, or 1 percent, to $4.2575 a bushel in Chicago, after advancing 1 percent yesterday. The most-active contract reached a seven- month high of $4.34 a bushel on May 13 and is up 4.6 percent this year.

Investments Increase

Improving economic confidence is increasing investment in commodities, said Charlie Sernatinger, a market analyst for Fortis Clearing Americas LLC in Chicago.

Hedge-fund managers and other large speculators increased their net-long positions in corn futures and options traded in Chicago by 70 percent to 137,273 contracts in the week ended May 12 from a week earlier, the highest in nine months, data from the Commodity Futures Trading Commission show.

Speculators increased net-long futures and options positions in Chicago soybeans by 6.6 percent to 112,138 contracts, the highest since July, according to CFTC data.

“Money continues to flow into commodities,” Sernatinger said.

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