Corn, soybean and cotton futures in China surged by exchange limits today, tracking gains in U.S. markets, as a weaker dollar boosted their appeal as haven assets and on concern that global demand will outstrip supply.

May-delivery corn on the Dalian Commodity Exchange gained 4 percent to 2,153 yuan ($323) a metric ton and closed at 2,149 yuan. Contracts in Chicago advanced to a two-year high after the dollar fell toward an eight-month low against the euro on speculation that Federal Reserve policy makers will signal this week their willingness to buy more government debt to support economic growth.

Given the uncertain economic outlook in the U.S., there's growing expectation that quantitative easing in the U.S. is on the way, therefore worsening the outlook of the U.S. dollar and boosting the appeal of commodities, Yang Zhichang, analyst at Yide Futures Co., said in a report today.

U.S. employers cut payrolls by 95,000 workers in September after a revised 57,000 decrease in August, Labor Department figures in Washington showed on Oct. 8. The median forecast of 87 economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.

Grains were also supported after the U.S. Department of Agriculture on Oct. 8 cut its corn-crop estimate for the second time in as many months, predicting a 3.4 percent decline from last year after flooding in June and hot, dry weather in August cut Midwest yields.

Corn gained as much as 8.5 percent to $5.7375 a bushel on the Chicago Board of Trade today, the highest level since September 2008.

Low Inventories

Soybeans for May delivery surged by 4 percent to 4,276 yuan a ton and closed at 4,275 yuan. May-delivery rapeseed oil and palm oil also jumped by the daily limit of 5 percent in Dalian to 9,378 yuan a ton and 8,184 yuan, respectively.

The latest U.S. Department of Agriculture report also showed a surprisingly low soybean inventory estimate in the U.S., leading to expectation that supply of the oilseed will get tight, Huatai Changcheng Futures Co. said in a report today.

Gains in the agricultural commodities buoyed Chinese equities. Seed makers Gansu Dunhuang Seed Co. jumped 10 percent, the maximum allowed in one day, to 32.41 yuan a share in Shanghai, and Shandong Denghai Seeds Co. also advanced 10 percent to 76.89 yuan a share in Shenzhen.

Cotton Rally

Cotton for May delivery dvanced 9 percent to 25,390 yuan a ton on the Zhengzhou Commodity Exchange, the maximum allowed today.

China, the world's largest cotton buyer, had booked to buy September booked to buy 595,000 tons of U.S. new-crop cotton, by the end of September Wanda said. The expectation is that China will have to import a lot more to bridge a domestic supply shortfall, a factor that has supported cotton prices, it added.

Bloomberg