US corn rebounds after selloff; wheat, soy firm

SINGAPORE: US corn futures bounced back on Friday, rising more than 1 percent, while wheat strengthened on short-covering after a selloff in the previous session which saw both markets suffer their biggest daily losses in two months.

Soybeans rose half a percent, tracking corn and wheat higher, although forecasts of rains in the US Midwest over the weekend should improve crop yields.

"It is a bit of a recovery from selloff as we had a pretty solid selloff last night," said Brett Cooper, senior manager for markets at FCStone Australia. "Last night we saw the market take profit off the books as we are in a new month now and today we are seeing some short-covering."

Chicago Board of Trade benchmark December wheat rose 0.8 percent to $7.66-3/4 a bushel by 0158 GMT. November soy gained 0.6 percent to $14.43 a bushel and December corn up 1.1 percent to $7.46-1/2 a bushel.

December wheat has lost 3.7 percent so far this week, snapping four straight weeks of gains, and corn is down 2.7 percent following strong gains in the last four weeks. But soy added 1.3 percent, extending gains for a third straight week.

On Thursday, US corn and wheat posted their biggest drops in two months of nearly four percent as traders locked in profits from strong monthly gains ahead of a long holiday weekend. The market will be closed on Monday to mark the US Labor Day.

Friday's strength in corn and soybeans came as private forecaster continued to bet on lower crop yields following hot weather in July and August.

Commodity brokerage firm INTL FCStone estimated this year's US corn yield at 146.3 bushels per acre (bpa), down 4.5 percent from its previous estimate of 153.2. It put the corn harvest at 12.350 billion bushels, down 5 percent from its Aug. 2 forecast of 13.002 billion.

It also lowered its US soybean production estimate 3.6 percent to 3.030 billion bushels from its previous forecast of 3.145 billion.

There was some support for the wheat market as Argentina's main farming belt is in need of rain. Dry soil threaten to complicate the development of wheat crop, the Buenos Aires Grains Exchange said.

Argentina is a leading global wheat exporter and farmers are expected to gather 13.5 million tonnes this season, down from 15 million in the 2010/11 crop year, according to the US Department of Agriculture.

Cooler temperatures and scattered showers soon will move into the US Midwest and Plains crop areas, providing a bit of a boost to filling corn and soybeans, but more rainfall is needed, an agricultural meteorologist said.

The rain was likely too late to boost corn yields but soybeans will benefit from the additional moisture.

US soybean export sales last week fell about 10 percent from the prior week due to competition from South American suppliers, analysts said after Thursday's weekly US Agriculture Department export sales report.

US corn export sales jumped nearly 19 percent last week but the sales lagged the year-ago pace as high prices and competition from alternative feeds such as feed wheat restricted demand, traders said.

Commodity funds were net sellers of an estimated 18,000 contracts of Chicago Board of Trade corn futures on Thursday, trade sources said. They were net sellers of 3,000 wheat contracts and sold 8,000 soybean contracts.

Copyright Reuters, 2011