US corn futures rise on Chinese imports

US corn futures rose for a second straight session on Friday as purchases by China buoyed the market, but gains were capped by caution ahead of closely watched US employment data. A string of sales to China has helped corn recover ground after a sell-off triggered by bigger-than-expected area and stocks estimates from the US government on June 30.
Last week and this week China has been buying US corn and we expect they will continue to take more at these prices which is a very bullish factor," said Kazuhiko Saito, chief commodities analyst at Fujitomi, a Tokyo-based commodities trading company. Our estimate is that they will easily take 5 million tonnes of US corn this year and most of the buying will take place in July and August," said the analyst. Trade sources in China said the country could buy even more that in 2011, with one analyst saying it may seek to buy 9-10 million tonnes.
China's demand, spurred by the cooling of US prices after a record high just shy of $8 a month ago, has shifted focus back to bullish fundamentals after the shock of the US Department of Agriculture's supply revisions. "Despite expectations for higher corn output figures for the 2012 season, corn's tight supply fundamentals will remain firmly in place," Natixis analysts said in a note.
"The correction in corn prices may extend further if prospects for the current crop keep on improving, but with end stocks to total use ratios remaining close to all-time lows, it is likely that prices will remain well above previous lows." The USDA confirmed the sale of 540,000 tonnes to China before the start of the US session on Thursday. Another 300,000 tonnes were sold to an unknown destination, which traders said was also for China.
RUSSIA WHEAT EXPORTS Chicago Board of Trade new-crop December corn rose 0.89 percent to $6.21 a bushel by 1121 GMT. Front-month July corn , which expires next week, was up 1.46 percent at $6.59-1/2. CBOT December wheat gained 0.37 percent to $6.77-3/4 a bushel. November soy inched up 0.09 percent to $13.39-1/2.
In Europe, wheat futures were firm after falling on Thursday as the first sale of Russian wheat to Egpyt in almost a year underlined growing export competition after Russia lifted an export embargo on July 1. Benchmark November milling wheat on the Euronext exchange was up 1.18 percent at 192.75 euros a tonne. Movements in grain markets were curbed by caution before US non-farm payroll data due at 1230 GMT.
The report is expected to give a strong reading after a separate jobs report on Thursday showed four times more workers in June than in May and boosted share prices. The anticipation of favourable employment data pushed the dollar higher, acting as a brake on commodities priced in the US currency. While export demand lifted corn prices, the upside potential has been limited as three US senators reached a deal to repeal the $6 billion per year ethanol tax credit by the end of July. Congress must still vote on the agreement.
A repeal would be a blow to the corn market but the market is still underpinned by a government mandate to make 12.6 billion gallons of ethanol from corn this year - a figure that will rise to 15 billion gallons by 2015. The wheat market was awaiting the outcome of a tender by Tunisia as a fresh sign of Russian competition after the Black Sea producer lifted an grain export ban on July 1.
"They launched this tender to take advantage of the prices that were seen in Egypt's tender yesterday," Edouard Tallent of French analysts Offre & Demande Agricole said. Egypt, the world's top wheat importer, bought 180,000 tonnes of Russian wheat on Thursday in a tender that showed a price gap of nearly $40 a tonne between Russian and French offers, and which pressured European wheat futures.