Forexpros – U.S. grain futures ended the week mixed on Friday, with soybean futures rallying to the highest level since late August, while corn and wheat futures came under pressure from favorable weather conditions in key U.S. grain-growing regions.
On the Chicago Mercantile Exchange, soybeans for May delivery settled at USD14.5388 a bushel by close of trade Friday, the highest since August 31, 2011. On the week, prices gained 1.34%.
Soybean futures surged almost 3% on Friday, amid further evidence demand for U.S. soy from top consumer China remains strong.
The U.S. Department of Agriculture said that U.S. farmers sold 1.219 million tonnes of soybeans last week, the highest in five weeks and above a range of trade expectations for 850,000 to 1.1 million tonnes.
In addition, the USDA confirmed a sale of 230,000 tonnes of U.S. soybeans to China for delivery in the 2012-13 marketing year that begins September 1.
The agency reported another sale of 225,000 tonnes to an unknown destination, thought by many market participants to be China as well.
China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.
Meanwhile, ongoing concerns over drought-stricken crop in major South American growers provided further support.
Argentina cut its official estimate for this year’s soy crops on Thursday, fuelling speculation the USDA will slash its own estimates on the country’s soy output in its next supply-and-demand report due in early May.
Argentina is a major soy exporter and competes with the U.S. for business on the global market. A downbeat Argentinean crop outlook could increase demand for U.S. supplies.
Combined output in Brazil, the second-largest grower, and Argentina, the third-biggest, will drop 11% from last season to 111 million metric tons, the lowest in three years, the USDA said earlier in April.
Soybean prices have rallied nearly 22% since the beginning of December, and are up almost 18% since February, as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and on hopes demand from top consumer China will remain robust in the near-term.
Elsewhere on the Chicago Board of Trade, corn futures for May delivery settled at USD6.1088 a bushel by close of trade on Friday. On the week, prices lost 2.35%. Prices fell to USD5.9900 a bushel on April 18, the lowest since January 19.
Corn prices slumped almost 2% on Friday after USDA data showed that U.S. farmers sold 298,000 tonnes of U.S. corn, significantly below estimates for 700,000 to 950,000 tonnes.
Market participants were disappointed that the export data did not confirm a sale of U.S. corn to China. Futures surged on Thursday, boosted by market talk China was purchasing U.S. cargoes of the grain after prices dipped below USD6.00-per-bushel.
Crop-friendly weather in the U.S. Midwest Corn-Belt further weighed. Agricultural traders pay close attention to the weather because farmers need favorable conditions to grow large crops to replenish low inventories.
Corn prices have been under heavy selling pressure in recent sessions, losing nearly 8.5% since April 3 after U.S. government data revealed that U.S. farmers planted the largest corn area since 1944, easing concerns over tightening global supplies.
The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain, while China is the world’s largest consumer of the grain.
Meanwhile, wheat for May delivery settled at USD6.1688 a bushel by close of trade on Friday. Prices fell by a modest 0.56% on the week. Wheat futures fell to USD6.0375 a bushel on April 18, the lowest since January 20.
USDA export data revealed that net export sales of U.S. wheat totaled 442,200 tonnes last week, below estimates for 450,000 to 650,000 tonnes.
Wheat prices have been under heavy selling pressure in recent sessions, losing almost 8% since March 30 on the view that global supplies are ample.
As of last week, approximately 64% of U.S. winter-wheat crops were rated in ‘good’ to ‘excellent’ condition, up from 61% in the preceding week and significantly higher than 36% in the same week a year earlier.
The above-average pace of U.S. spring-wheat plantings added to the view that global supplies of the grain are ample to meet demand.
In its most recent Supply & Demand Estimate Report, the USDA pegged global wheat supplies in the current marketing season at 206.27 million tons, the highest in 11 years.
Global wheat production was projected at a record high 694.32 million tonnes, almost 7% above the previous season’s output level.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
In the week ahead, grain traders will continue to monitor weather conditions in South America and throughout the U.S. Corn-and-Wheat-Belt regions.
Meanwhile, the USDA was to release its weekly crop progress and plating progress reports on Monday, while markets await the agency’s weekly exports data scheduled for release on Thursday.
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