Friday November 28, 2014

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Chicago grains inch up but end lower for week

Corn snaps 10-day losing streak

U.S. grain prices inched higher on Friday in a modest recovery, driven by improving export prospects due to weaker prices, and corn snapped its longest losing skid in 5-1/2 years.

Chicago corn, wheat and soybeans still posted weekly losses, as welcome precipitation was headed for the U.S. Plains hard red winter wheat region and parts of Argentina.

"We've been on an extended slide this week and we're just cleaning up a little bit in front of the three-day weekend (with) a little short-covering," said Terry Linn, analyst at The Linn Group.

U.S. markets are closed on Monday for the Presidents' Day holiday.

Wheat also drew support from the sale of at least 100,000 tonnes of U.S. hard red winter wheat to Brazil and a sale of U.S. wheat to Japan, Linn said.

Chicago Board of Trade (CBOT) March wheat gained 10-1/4 cents, or 1.4 per cent, to $7.42-1/4 a bushel (all figures US$).

The contract hit $7.22-1/2 a bushel on Wednesday, the lowest for a front month in more than seven months, and registered a weekly loss of 1.9 per cent.

The U.S. Department of Agriculture (USDA) on Thursday reported last week's export sales of wheat for the current and new marketing year at 706,300 tonnes, a seven-week high that topped trade expectations for 275,000 to 400,000 tonnes.

"Last night's higher export numbers are supporting wheat, and despite some snow and rains, concerns still remain about the impact of the dry winter in the U.S.," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.

Some additional drought relief is expected by the middle of next week in the U.S. Plains hard red winter wheat region, with significant snow and rain forecast for Kansas and Nebraska, said Drew Lerner, an agricultural meteorologist for World Weather Inc.

But while the moisture would ease dry-weather stress on the wintering wheat crop, much more rain is necessary to boost production prospects, he said.

Concern that dry weather in the United States could disrupt plantings this spring helped underpin corn and soybean prices.

U.S. farmers will plant crops this spring as the threat of a drought looms over prime farmland from the Mississippi River to the Rocky Mountains. Grain supplies are already tight from drought losses in 2012.

CBOT March corn rose four cents, or 0.6 per cent, to $6.98-3/4 a bushel, aided by a technical bounce, but posted a weekly loss of 1.4 per cent. Corn's gain snapped a 10-session losing streak, its longest since mid-2007.

The driest areas in Argentina, especially the main corn-producing region in the southwest, are poised to receive additional rainfall overnight on Friday and Saturday but not enough to provide meaningful drought relief, Lerner said.

"It's kind of a wait-and-see-what-happens (attitude) with the Argentine weather system that's expected to roll through over the weekend," said Terry Reilly, senior commodity analyst at Futures International. "And we'll see if central and northern Brazil will stay dry enough for active harvesting."

March soybeans rose 6-1/2 cents or 0.5 per cent to $14.24-1/2 a bushel and finished with a weekly loss of 1.9 per cent.

The U.S. government pegged soybean sales at 235,900 tonnes, including net cancellations of 109,100 tonnes for 2012-13 and net sales of 345,000 tonnes for 2013/14. Trade estimates were for 700,000 to 1.1 million tonnes.

USDA reported on Friday the cancellation of 250,000 tonnes of U.S. soybeans sold to unknown destinations this marketing year, and the news likely caused some long investors to close positions, Reilly said.

The January soybean-crushing volume from the National Oilseed Processors Association came in below the average trade estimate, but was still the second-largest monthly total in three years.

Brazil is positioned to surpass the U.S. as the world's biggest soybean producer. Its harvest is 12 per cent complete, above the five-year average of seven per cent, analysts at Celeres said earlier this week.

"There's bearish news for oilseeds and that bearish news is the South American harvest," Mathews said.

-- Rod Nickel is a Reuters correspondent based in Winnipeg. Additional reporting for Reuters by Sam Nelson in Chicago, Nigel Hunt in London and Mayank Bhardwaj in New Delhi.


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