U.S. wheat surged nearly three per cent on Friday, passing US$7 per bushel for the first time since June, as a smaller-than-expected production forecast from Argentina fed optimism about the demand outlook for U.S. supplies.
Corn futures followed wheat higher, touching the highest level in a week and a half, but failed to hold the gains amid the ongoing harvest of a likely record-large U.S. crop. Soybeans eased in a profit-taking setback following strong gains on Thursday.
"People still have optimism regarding the pace of wheat export sales. There were reports of Argentina production being dropped. If they do have 8.8 (million tonnes), that really doesn't leave much for export," said Shawn McCambridge, an analyst at Jefferies Bache in Chicago.
Brazil has stepped up purchases of U.S. wheat after frost damaged crops in neighbouring Argentina, usually the source of much of Brazil's wheat imports.
Late on Thursday, Argentina's agriculture ministry estimated wheat production at 8.8 million tonnes. The estimate, released shortly before the close of trading, was sharply lower than the
12 million tonnes estimated by the U.S. Agriculture Department last month.
Chicago Board of Trade December wheat jumped 19 cents, or 2.9 per cent, to $7.05-3/4 per bushel, its largest daily gain since late August (all figures US$). For the week, wheat gained two per cent.
A bullish background for wheat included Chinese buying of U.S. and Australian wheat in recent weeks after suffering crop damage earlier this year, and crop damage in Argentina.
The price of Argentine wheat has soared on the local market as millers there scramble for scarce supplies ahead of the 2013-14 harvest, which follows a thin 2012-13 crop.
Additional support stemmed from a threatened rail strike in Canada that could hamper exports of its massive crop and shift some business to the U.S.
USDA export data awaited
CBOT December corn shed 1-1/2 cents, or 0.3 per cent, to $4.41-1/2 a bushel after earlier rising as high as $4.47-3/4. CBOT November soybeans fell two cents, or 0.2 per cent, to $12.91-1/4 a bushel. Both commodities gained 1.9 per cent in the week.
Commodity funds sold an estimated net 3,000 corn contracts and 2,000 soybean contracts on the day, and bought a net 6,000 wheat contracts, trade sources said.
Investors were awaiting the release of nearly three weeks of delayed USDA data, including export sales figures likely to show nearly three million tonnes of soybeans and more than two million tonnes of corn were sold to overseas buyers. China was a major buyer of both commodities.
The data were delayed due to the partial U.S. government shutdown.
USDA said it will release the first of three missed export sales reports at 2 p.m. CT on Friday and will announce the schedule for the remaining reports later.
USDA said it was cancelling an already delayed October crop production report, originally scheduled for Oct. 11 -- the first time it has scrapped the report in 147 years. The next USDA crop report is scheduled to be released Nov. 8.
Some delays this week in harvesting the U.S. corn and soybean crops have lent short-term support to corn and soybeans, but prices remain anchored by expectations for a record-large U.S. corn crop and the fourth-largest soy crop.
-- Michael Hirtzer and Karl Plume report for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.