By Luzi Ann Javier Feb. 23 (Bloomberg) -- Soybeans gained for a second day, erasing earlier losses, as a weaker dollar made U.S. supplies more attractive to importers and on speculation investors are closing bets on price declines. Soybeans for May delivery rose 0.6 percent to $9.7475 a bushel in after-hours electronic trading on the Chicago Board of Trade at 3:01 p.m. Singapore time, after declining 0.4 percent earlier. The Dollar Index, which tracks the value of the greenback against six major currencies including the euro and the yen, fell for a second day on speculation the U.S. Federal Reserve will hold its target interest rate near zero to sustain a recovery in the world’s biggest economy. “It’s the big funds buying in the grain market, covering their previous short positions,” Johnston Bae, a grains broker at Eugene Investment & Futures Co., said from Seoul. “They must be taking advantage of the weakness in the dollar.” Speculative short positions, or bets Chicago soybean prices will fall, declined 15 percent to 75,034 contracts in the week ended Feb. 16, according to data from the U.S. Commodity Futures Trading Commission. Speculative long positions outnumbered short positions by 19,603 contracts, it said. Demand for soybeans in China, the world’s biggest buyer of the oilseed, will remain “huge and irreversible” Han Jun, director of the rural economy department at the Development Research Center of the State Council said at a press conference in Beijing today. Wheat Falls Wheat for May delivery lost as much as 0.7 percent to $5.1175 a bushel before trading at $5.14 at 2:52 p.m. Singapore time. May-delivery corn was unchanged at $3.8275 a bushel, after dropping as much as 0.4 percent. Total inventories of cereals including wheat, corn and rice are forecast to rise to 523.1 million metric tons in the 2009- 2010 season, up from a November forecast of 509.1 million tons, the Rome-based FAO said in its crop outlook report. That’s 3 percent higher than last year’s 507.8 million tons. Wheat production close to the 2008-2009 record will more than compensate for rising usage of the grain, the FAO data shows. Global wheat trade will drop 16 percent to 118 million tons because of bigger harvests in Asian and North African countries, it said. Wheat can be used in place of corn in making animal feeds. Yields in Argentina, the largest soybean producer after the U.S. and Brazil, may be less than expected as rains threaten to cause beans to rot and fungal diseases spread, Eduardo Anchubidart, who heads the crop-forecast division of the Buenos Aires Cereals Exchange, said yesterday. About a third of Argentina’s 19 million hectares (47 million acres) of soy crops are located in the so-called Soybean Belt, where El Nino has triggered above-average rainfall. Harvesting in the area, which has the highest yields in the country, starts this week and continues through March. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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