US corn and wheat rose for a second straight day on Friday, on track to end the week on a positive note after two straight weeks of losses, with easing concern over the European debt crisis providing support. Asian shares extended their gains to fresh two-month highs as solid euro zone sovereign debt sales and signs of Greece moving closer to a vital debt-swap deal eased concerns over Europe's refinancing capability and boosted risk appetite.
Upbeat earnings from more US banks and data confirming the US economy stayed on a recovery track also helped underpin sentiment, which has been improving since the start of the year. Still, bearish fundamentals of higher global supplies and forecasts of rains over the weekend in drought-stricken Argentina continued to weigh on corn and soya prices.
"The bounce is driven by the more supportive macro-economic environment which we are facing at the moment," said Luke Mathews, Commodities Strategist at Commonwealth Bank of Australia. "The biggest constraint on price rises is that those production concerns in South America have eased compared with a fortnight ago." Chicago Board of Trade corn for March delivery gained 0.5 percent to $6.08-3/4 a bushel by 0256 GMT and March wheat also added 0.5 percent to $6.08-1/2 a bushel. March soya was unchanged at $11.97 a bushel. Corn, wheat and soyabeans have risen more than 1 percent so far this week, on track to snap a two-week losing streak.
RAIN EXPECTED IN ARGENTINA Hopes for improved export interest also supported corn and soyabean values. The US Department of Agriculture said exporters sold US corn to Mexico and South Korea. China booked 120,000 tonnes of US soyabeans and there was talk of more purchases coming soon due to a slow harvest of early-planted soyabeans in Brazil, the world's No 2 exporter of the oilseed after the United States.
There was also talk that the yield count in the early harvested soyabeans in Brazil was lower than expected. The stepped-up purchases by China could be due to the approach of the Lunar New Year holiday next week. A weaker dollar also contributed to the positive sentiment around US commodities. The dollar index, which measures the strength of the greenback against a basket of currencies, fell 0.2 percent.
Traders were also watching the weather forecast for South America, where hot and dry conditions have devastated crop potential for both corn and soyabeans. Much-needed rain was expected in dry crop areas of Argentina Friday through Tuesday. "We are expecting widespread rains throughout South America this weekend and into early next week," said Mathews. "There is a forecast of follow up rain a week or so after that, so it appears that significant crop production concerns in Argentina have eased."
Gains in wheat and corn were limited by expectations for rising supplies this year, which the USDA forecast in its monthly supply and demand estimates last week. On Thursday, the International Grains Council raised its estimate of the world maize crop by 8 million tonnes due to an improved outlook in China. It also boosted its wheat production forecast by 7 million tonnes.
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