Soybean Prices Slide on Signs of Declining Demand; Corn Drops

July 2 (Bloomberg) -- Soybeans fell for the fifth time in six sessions on speculation that demand from oilseed processors is dropping. Corn futures also declined, marking the biggest weekly drop in seven months.

The so-called spot-basis bid, or premium offered for soybeans in New Orleans, fell to $1.44 to $1.55 a bushel above August futures traded in Chicago yesterday, from $1.50 to $1.63 a day earlier, the U.S. Department of Agriculture reported yesterday. A lower basis bid signals less demand from processors that turn the oilseeds into meal and oil.

“We’re seeing some cash-basis levels drop off, which may be a sign that meal demand has waned a little bit,” said Darrell Holaday, the president of Advanced Market Concepts in Manhattan, Kansas. “Processors are finding it hard to move meal at this price level. If demand for meal drops off enough, they’ll back that basis off for beans. That indicates demand has started to wane at these price levels.”

Soybean futures for November delivery fell 9.5 cents, or 0.9 percent, to $10.06 a bushel on the Chicago Board of Trade. The price still rose 1.5 percent for the week after jumping 3.5 percent yesterday, the most since June 4. The CBOT is closed tomorrow to mark the Independence Day holiday on July 4.

Corn fell after a government report showed U.S. farmers seeded more than expected and as crude-oil futures declined, reducing demand for ethanol made from the grain.

Crude Oil Slides

About 87.035 million acres were probably seeded with corn this year, the USDA said on June 30, more than the 85.982 million expected by analysts surveyed by Bloomberg News. Crude oil fell as much as 4.1 percent today. When oil falls, demand for alternative fuels including ethanol wanes.

“During the first half of the week, corn was hammered by the acreage report and the last half by the reversal in crude prices,” Holaday said. “Oil has made major reversals, and that’s going to weigh on corn.”

Corn futures for December delivery fell 11.75 cents, or 3.2 percent, to $3.575 a bushel in Chicago. The price dropped 12 percent this week, the biggest weekly decline since Dec. 5. The most-active contract reached a seven-month high of $4.50 on June 2 as cold, wet weather in the U.S. Midwest threatened to reduce crop yields.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, with soybeans in second place at $27.4 billion government figures show. The U.S. is the largest producer and exporter of both crops.