Corn Prices Decline as Dollar Rebound Cuts Investment Demand

Corn prices slipped, paring this week’s gain, as a rebound by the dollar curbed investor demand for commodities to hedge against inflation.

The dollar headed for the first weekly gain against the euro in three weeks after European Central Bank President Jean- Claude Trichet said “it’s too early” to declare the financial crisis over. The dollar rally deterred demand for riskier assets, analysts said. Corn futures, the most widely held U.S. agricultural commodity contract, rose 19 percent from the end of September through yesterday.

“The dollar rally is triggering selling from speculators and investors,” said Dale Durchholz, an AgriVisor LLC senior market analyst in Bloomington, Illinois. “The markets have had a good run and the dollar is about done going down” because of concern that the world economy isn’t as strong as people expected when they rushed to buy commodities, he said.

Corn futures for March delivery fell 3.75 cents, or 0.9 percent, to $4.07 a bushel on the Chicago Board of Trade. The most-active contract rose 0.3 percent this week, the third straight weekly advance. On Nov. 18, corn touched $4.25, the highest price in almost five months.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, government figures show. The U.S. is the world’s largest grower and exporter.

By Jeff Wilson
Bloomberg