Wheat, Soybeans Advance as Dubai World Default Concerns Ease

Wheat jumped as much as 1.9 percent and soybeans gained as the dollar declined after the United Arab Emirates’ central bank eased credit, boosting optimism the impact of Dubai World’s possible default may be limited.

The UAE central bank yesterday said it “stands behind” the nation’s local and foreign banks and offered them access to more money under a new facility as they face losses from Dubai World’s debt.

“The stance that they have stated they will take should further calm markets’ nerves,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney today. “The developments in Dubai have certainly added to the volatility in agricultural commodity markets.”

Wheat for March delivery gained as much as 10.75 cents to $5.805 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $5.78 a bushel at 10:14 a.m. Singapore time. Wheat fell 1.9 percent last week.

Soybeans for January delivery added as much as 1.1 percent to $10.645 a bushel and last traded at $10.635. The contract gained 0.7 percent last week.

Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities until at least May 30, 2010. That raised the prospect of rising loan losses for U.A.E. and foreign banks.

The Dollar Index, which tracks the value of the greenback against six major currencies including the euro and the yen, fell 0.5 percent to 74.61 at 10:37 a.m. Singapore time, extending last week’s 0.9 percent drop.

U.S. ‘Struggling’

Fourteen of 27 traders and analysts surveyed on Nov. 27 from Tokyo to Chicago said corn and soybean prices will rise this week, on speculation commodity investments will increase at the start of December as rain and snow reduce yields in the U.S., the world’s biggest grower and exporter of both crops.

Major U.S. growing states including Iowa, Illinois, Nebraska, Minnesota and Indiana were forecast to have below- normal temperatures between Dec. 5 and Dec. 13, the U.S. Climate Prediction Center said Nov. 29.

“What the U.S. farmers need at the moment is dry and warmish weather for the completion of their harvest,” Mathews said. Cold weather “may weigh on prices there.”

About 68 percent of the corn crop in the 18 largest U.S. producing states had been harvested as of Nov. 22, compared with 87 percent a year earlier and an average of 94 percent in the past five years, the U.S. Department of Agriculture said Nov. 23. About 94 percent of soybeans had been collected in the same period, compared with 97 percent a year earlier, it said.

Stronger Demand

Corn for March delivery was little changed at $4.1375 a bushel at 10:41 a.m. Singapore time.

Corn may lead an advance in grains and oilseed markets in Chicago this week on optimism demand may be stronger than expected, Mathews said.

The USDA said last week exporters sold 1.22 million tons of corn in the week ended Nov. 19, more than triple the volume a week earlier. An additional 402,900 tons were sold for delivery in the next marketing year beginning Sept. 1, it said.

Source: Bloomberg