US wheat rebounds, corn firm on bargain hunting

SINGAPORE: US wheat rose more than 1 percent on Friday, while corn firmed as bargain hunting by end-users supported grains, which slid in the previous session to their lowest in more than two months amid recession fears.

Soybeans were little changed after being battered to a six-month low on Thursday as ample South American supplies weighed on the prospects of US new-crop sales.

"It is certainly going to start interest among consumers -- last night we saw Egyptians back in the market taking a big chunk of the Russian wheat once again," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia in Sydney.

"But the question consumers are asking themselves is, 'What is around the corner? Are we staring over the edge of another global financial crisis type of event?' and if that was to evolve, you will see further losses."

For the week, soy is on track for its biggest loss since early March, while corn and wheat are falling for a fourth straight week.

Chicago Board of Trade December wheat rose 1.2 percent to $6.41-1/4 a bushel by 0240 GMT, after sliding to its lowest since July 12 on a continuation chart on Thursday, while December corn rose 0.7 percent to $6.54-3/4 a bushel.

November soybeans were unchanged at $12.83 a bushel, the lowest since mid-March for the front-month contract.

The euro rose briefly on Friday on talk of a G20 emergency statement to address the euro zone crisis, but the prospect of a global recession kept Asian stocks firmly on track for their worst weekly drop since November 2008.

Alarm about the risk of another economic downturn, after the US Federal Reserve's dire forecast at a two-day policy meeting that eneded on Wednesday, pushed world stocks to 13-month lows as investors shed risky assets and scurried for safety.

The agricultural markets, which have also been pressured from fears that a global economic slowdown will hurt demand, are seen as oversold, prompting end-users to lock in supplies.

Egypt, the world's largest wheat importer, bought 240,000 tonnes of Russian wheat to make the most of lower prices. Since the start of the 2011/12 fiscal year on July 1, GASC has purchased 2.22 million tonnes of Russian wheat and 180,000 tonnes of Romanian wheat.

US wheat weekly export sales topped forecasts on Thursday. The US Department of Agriculture reported net sales of 679,500 tonnes for the 2011/12 marketing year, up 64 percent from the previous week and 66 percent higher than the prior 4-week average.

The weather is also likely to provide support to the market.

Winter wheat growers in the US Plains hard red winter wheat growing region remain on edge as they seed the 2012 crop amid a devastating drought, according to an agricultural meteorologist.

Farmers are expected to plant wheat regardless of soil moisture levels in hopes of a break from the devastating drought and heat wave that had struck over the summer.

The International Grains Council on Thursday cut its forecast for global maize production in 2011/12, reflecting diminished prospects for the US crop, but also trimmed the outlook for consumption as high prices begin to curtail demand.

China's much-vaunted policy of self-sufficiency in corn production is under threat from scarce water supplies and shrinking farmlands, making imports inevitable in the face of rapidly growing demand.

Dry weather in Argentina has dimmed the outlook for 2011/12 wheat output, although rains in recent days have allowed progress on delayed corn sowing.

Copyright Reuters, 2011