US corn prices slipped back slightly from the prior session's 31-month peak but remained underpinned by strong export demand and tight stocks while US wheat and soyabeans posted modest gains. Dealers said the corn market was consolidating after its steep advance during the last few days but was likely to set new highs in the near future.
"We have been positive on corn prices and believe that the combination of strong demand growth, continued Chinese imports, coupled with lowered yields in the US and weather disruptions in Argentina continue to support corn prices higher still," Barclays Capital said in a market note on Friday.
The USDA on Thursday pegged weekly export sales of corn at 1.2 million tonnes for combined old-crop and new-crop supplies, topping analysts' estimates for 750,000 to 950,000 tonnes. Corn for March delivery on the Chicago Board of Trade eased 2-3/4 cents or 0.4 percent to $6.95-3/4 a bushel by 1128 GMT, still within striking distance of Thursday's 31-month peak of $7.04-1/2.
The rise in corn prices has been fuelled partly by falling inventories with the US government this week projecting the tightest supply since the Great Depression as a record amount of the crop is used to make ethanol. "In our view, CBOT corn prices must continue to rise across the curve at a faster pace than soyabeans or wheat to increase demand rationing of the 2010/11 corn crop as well as production for 2011/12," Rabobank said in a market note.
US wheat futures edged up in a modest rebound from the prior session's steep decline as traders continued to eye the outlook for exports. "We saw a sharp drop in wheat yesterday, so there is some bargain hunting's going on in wheat," said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures.
USDA reported net sales for the 2010/11 marketing year of 391,300 tonnes, down 27 percent from the previous week and 40 percent from the prior 4-week average. "At 391.3 thousand tonnes, old-crop sales were well below the pace needed to achieve the USDA's annual US export target," said Luke Mathews at Commonwealth Bank of Australia. The market derived some support, however, from continued demand from top wheat buyer Egypt despite political turmoil. Egypt's main government wheat buyer on Thursday entered global markets for a second time in a week, suggesting that the procurement process has not been disrupted.
CBOT March wheat rose 1 cent or 0.1 percent to $8.63-3/4 a bushel while March milling wheat in Paris eased 0.5 euros or 0.2 percent to 275.50 euros a tonne. Operators said French wheat remained more expensive than other soft-wheat origins and could miss out again on a sale to Egypt like in the north African country's previous tender last weekend, traders said.
Weekly European Union data also showed a lull in activity, with the third-lowest volume of export licences this season, suggesting demand-rationing may be taking effect in a tight European market. Soyabean prices edged up with the CBOT March contract up 1-1/4 cent or 0.1 percent to $14.34-1/4, supported by modest gains in both CBOT corn and wheat.
Forecasts for improved crop weather in key soyabean-producing areas of South America helped to keep a lid on prices. Plentiful rains in January improved Argentina's 2010/11 soya crop and the output outlook is stable at 47 million tonnes, Buenos Aires Grains Exchange said Thursday.