Corn sales hit 7-week high as prices ease

CHICAGO: US corn export sales last week jumped nearly 28 percent from the prior week as a dip in prices and worries about a shrinking US crop triggered buying, analysts said after the US Agriculture Department's weekly export sales report on Friday.

The sales were near the low end of a range of trade expectations but were above prior-week sales for the third consecutive week as previously reluctant importers stepped up purchases, they said.

"Opportunistic buyers have made purchases in the past based on their assumptions that prices were a value. It certainly looks like that's what we're seeing here," said Rich Nelson, analyst with Allendale Inc.

Net export sales of US corn in the week ended Sept. 1 totaled 813,500 tonnes, according to USDA data, compared with trade expectations for 800,000 to 1 million tonnes.

Japan and Mexico were the week's top buyers, each with more than 300,000 tonnes in purchases.

South Korea, the No. 3 market for US corn after Japan and Mexico, has stepped up purchases in recent days as futures prices on the Chicago Board of Trade retreated further from the 2-1/2 month high posted early last week.

A group of South Korean millers bought 220,000 tonnes late last week. Private exporters sold another 161,900 tonnes to South Korea this week, USDA announced on Friday.

Worries about a smaller-than-anticipated US corn crop rallied prices in late August as the impact of late spring planting and an overly hot and dry summer became clearer, prompting many private analysts to slash production forecasts.

But prices have retreated about 6 percent from August highs amid rising supplies from an accelerating harvest.

USDA will issue its monthly crop production report on Monday, with analysts on average expecting deep cuts to both production and yield.

SOYBEAN COMPETITION

US soybean export sales fell 18 percent last week to a three-week low as stiff competition from Brazil and Argentina for shipments in October through December, normally the peak US soy export season, diluted demand, analysts said.

Brazil, the world's No. 2 soybean exporter behind the United States, harvested a record large soy crop this year, while No. 3 exporter Argentina harvested a near record crop.

China, the world's top importer, was expected to ship about 7 million tonnes from South America in the fourth quarter, nearly half of its total imports for that period and up about 2 million tonnes from last year, traders said.

Net US soybean export sales totaled 488,700 tonnes last week, within trade forecasts for 350,000 to 650,000 tonnes.

China bought a total of 223,600 tonnes, its lowest tally in three weeks. Meanwhile, USDA reported a cancellation on Friday of 240,000 tonnes in 2011/12 marketing year US soybean sales to China.

Copyright Reuters, 2011