CHICAGO: US wheat eased for the first time in seven sessions on Friday, but it was still on pace for its largest weekly bounce in a more than a month on growing export demand and concerns that wheat production in the Black Sea region may be reduced by bitter-cold weather.
Corn futures were modestly higher, bolstered by better export demand and a weaker dollar. Corn ended flat on Thursday, but it had not declined in seven sessions and was headed for its biggest gain in four weeks.
Volume was thin at the Chicago Board of Trade as traders consolidated positions ahead of the weekend. All corn and wheat contracts traded in both positive and negative territory.
"It's quiet and choppy with not much direction from the outsides. Corn is trying to move up on the strong US Gulf basis and the sale to Mexico helped," said Matt Pierce, analyst for GrainAnalyst.com.
The US Agriculture Department early on Friday said exporters sold 133,200 tonnes of US wheat to an unknown destination as well as 170,200 tonnes of US corn to Mexico.
The announcement followed export sales results on Thursday that put US wheat exports at a four-month high and corn sales at a three-month high. Cash prices at export points at the US Gulf have also gained in recent days, with corn hitting the highest point in a decade for this time of year.
Traders expect Russia, which has dominated global wheat export trade this year, to soon curb exports as it nears a self-imposed quota of 25 million tonnes.
"It's been a pretty good move up this week. You can't expect it to keep going," said Mark Schultz, analyst at Northstar Commodity Investments.
"At least we're seeing demand for the wheat. US wheat is competitive in the global markets and there is some business being done with an unknown destination," Schultz said.
CBOT March wheat fell 5-1/4 cents to $6.48-1/4 cents per bushel but was on track to gain 6 percent for the week. CBOT corn was up 3-3/4 cents at $6.38-1/4 and nearly 4 percent higher for the week.
A fierce cold snap engulfed Russia's southern wheat growing regions, where hard winter frosts are unusual, the Hydrometeorological Service, Russia's state forecaster, said on its website on Thursday.
"The market is trying to guess how the crop will progress in the Black Sea region? Is there going to be a large amount of winter kill in Russia?" asked Ole Houe, director of advisory services at Sydney-based brokerage Advance Trading Australasia.
Moreover, analyst ProAgro said on Thursday the grain harvest of major exporter Ukraine was likely to come in at about 40 million tonnes in 2012, down from a record of 56.7 million tonnes in 2011 due to a fall in acreage because of bad weather when winter crops were being sown.
SOY LOWER on SOUTH AMERICAN RAINS
CBOT March soybeans fell 5-1/4 cents to $12.17-1/2 per bushel as rains benefited crops in South America. Soybeans were headed for the second weekly gain, rising about 2.5 percent this week.
"The South American crop has received rains, which have satisfied people for now, but when you look at the forecasts, it looks pretty hot," Houe said.
However, diminished prospects for crops in South America following dry weather also continued to underpin corn and soybean prices.
Argentina's soy and corn harvests will be smaller this season than in the previous crop year, the Buenos Aires Grains Exchange said on Thursday, underlining concerns that recent dry weather might crimp world food supplies.
The dollar has been under pressure since the US Fed said on Wednesday it could keep rates near zero for the next three years. The dollar index was down 0.30 percent at 79.155, not far from a six-week low of 79.067.
A lower dollar makes commodities priced in the US currency more attractive to importers.
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