U.S. grains: Corn at six-month high on strong exports

Chicago | Reuters — Chicago Board of Trade corn prices rose to a six-month high on Thursday as stronger-than-expected weekly U.S. export sales data underscored renewed demand for the grain, traders said.

Soybeans rose more than one per cent on continued export demand for tightening U.S. supplies and ahead of a monthly U.S. government crop report due Monday.

Wheat set a three-month high on short-covering and spillover strength from corn, along with continued worries about political turmoil in Ukraine, a significant exporter of corn and wheat.

At the CBOT, March corn ended up 10-1/2 cents at $4.85-3/4 per bushel after reaching $4.87-1/4, the highest spot price since September (all figures US$).

Most-active May corn settled up nine cents at $4.91.

Benchmark May soybeans ended up 17-1/2 cents at $14.38 a bushel, and May wheat was up 3-1/2 cents at $6.46 a bushel.

Corn posted the biggest percentage gains of the three after the U.S. Department of Agriculture reported U.S. old-crop export sales of more than 1.5 million tonnes in the latest week, well above a range of trade estimates.

“We have really seen some strong sales for old-crop corn for the last month to six weeks,” said Brian Basting, an analyst with Advance Trading in Bloomington, Illinois.

“Ethanol production continues to edge higher,” Basting said. “And if you look at feed side, hog futures are up, and cattle futures at all-time highs, so you are looking at hopefully some profitability for the livestock folks. All those things are demand-positive.”

Corn and wheat drew background support from concern about political instability and violence in Ukraine. The unrest has caused some traders in that country to hold back from agreeing to new contracts, while Russian corn export prices have been rising for two weeks.

“Even though there has not been any escalation of the tensions in the Ukraine, the market is concerned,” said investment analyst Vanessa Tan of Phillip Futures.

Soybean sales also strong

Soybeans rose on worries that continued export sales of the oilseed could deplete U.S. stockpiles. USDA on Thursday pegged export sales of old-crop soybeans in the latest week at 772,700 tonnes.

“We are selling something we don’t have,” Basting said, noting traders expect USDA to raise its estimate of U.S. 2013-14 soybean export sales in its monthly supply/demand report on Monday.

“Year-to-date soybeans sales are now 1.623 billion bushels,” Basting said. “For the year (begun Sept. 1, 2013), USDA is forecasting we will ship 1.51 billion, so those numbers don’t fit.”

Sales of U.S. soybeans are expected to grind to a virtual halt in the next few weeks as freshly harvested soy from South America hits the export pipeline.

Brazil exported 2.79 million tonnes of soybeans in February, up sharply from 30,600 tonnes in January, Trade Ministry data released on Thursday showed.

However, traders expect USDA on Monday to trim its forecasts of soy and corn production in South America due to poor crop weather.

Wheat sets three-month top

CBOT wheat futures hit a three-month high on fund short-covering and concern about Ukraine. Open interest in CBOT wheat has dropped sharply in recent weeks, falling below 350,000 contracts this week for the first time since December 2009, as commodity funds exit short positions.

At the Minneapolis Grain Exchange, thinly-traded March spring wheat surged 39-3/4 cents to $7.41-1/4 a bushel, the highest spot price in four months, after a commercial firm stopped deliveries against the contract.

The move underscored strong demand for spring wheat at a time when rail backlogs in Canada have reduced availability of the grain.

However, deferred 2014 MGEX spring wheat contracts settled up only 1-1/2 to 6-1/2 cents.

— Julie Ingwersen is a Reuters correspondent covering ag commodity markets in Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Colin Packham in Sydney.

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