US corn futures rose 1 percent on Friday, to approach a record hit in the previous session, ahead of data likely to show a further cut in already thin stocks in the United States, the world's top exporter. A weaker dollar also helped spur grain and other commodities as the euro surged to a 15-month high versus the greenback on expectations of more euro-zone rate rises.
US wheat and soybeans added about 1 percent as the robust corn market and falling dollar encouraged buying after weakness earlier this week. Rising oil prices, which climbed above $124 for Brent on fresh violence in Libya, also underpinned grains and soybeans, which are used in making ethanol and biodiesel fuel.
The closely watched US Department of Agriculture report to be released at 1230 GMT is expected to cut ending stocks of US corn to a new 15-year low, reflecting ever growing demand for both animal-feed and ethanol use. "We are still in a tight supply-demand situation so there's no incentive for traders to take profits before the report," said Ker Chung Yang, analyst at Phillip Futures in Singapore.
Chicago corn has risen more than 15 percent since March 31, when the release of a US government report showing critically low corn stocks as of March 1 sparked a rally that catapulted corn prices to record levels. The contract reached an all-time top for front-month prices of $7.73 on Thursday, beating a previous record of $7.70 that had been equalled on Tuesday.
CORN-WHEAT GAP NARROWS With the consensus calling for a sharp cut in the USDA's corn stocks projection, investors could sell on the news unless it is surprisingly below market expectations, traders said. The USDA will release updated stocks forecasts for US corn, wheat and soybeans on Friday at 1230 GMT along with its latest world supply and demand estimates.
But powerful bullish factors for corn could keep prices climbing to fresh records. "The bullish momentum is still intact given low US supplies and demand rising with Japan facing food contamination problems, China expected to import more corn from the United States and gasoline prices being pushed up by the Libyan crisis," said Ker, who sees CBOT corn peaking at $9 this year. Wheat prices continued to react to corn, with an unusual narrowing in the price ratio between the crops making wheat even more sensitive to corn movements, traders said.
CBOT May wheat was up 0.74 percent at $7.79. European wheat prices were more subdued, pressured by the strength of the euro, with new-crop November milling wheat down 1.26 percent at 215.75 euros a tonne. The May contract was steadier, inching down 0.10 percent to 249.50 euros, reflecting tight old-crop supply. CBOT May soybeans rose 1.03 percent to $13.77-1/2 to recover some of its losses this week linked to advancing harvests in South America, which are expected to create competition for US exports.
The Buenos Aires Grains Exchange held its forecast for Argentina's 2010/11 soy production at 48.8 million tonnes, even after Rosario grains exchange raised its outlook to 49.7 million tonnes from 49.1 million tonnes, citing plentiful rains in February.
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