US wheat prices broke a four-day winning streak on Friday, with corn falling as well after China unveiled a bigger-than-expected 2011 grain output, although investors' more upbeat macroeconomic view helped cap losses in US grain markets. Hopes of upbeat US jobs data later on Friday, and of a bold solution to the euro zone debt crisis at a December 9 summit, powered a rally in stock markets and supported the euro against the dollar, making US grains more competitive.
"People remain nervous. The macro factors that were pushing the market down last week are now pushing it up, but the overall economic picture has not changed. The euro crisis has not been solved," said a broker in Paris. Corn remained under pressure from poor demand for US supplies and expectations of a bumper output in South America. China, the world's second-largest corn consumer, produced a record 191.75 million tonnes of corn in 2011, up 8.2 percent. The figure was much larger than expected by the market and analysts at 180-185 million tonnes.
Chicago Board of Trade December delivery corn shed 0.13 percent to $5.94 per bushel by 1145 GMT, while March added 0.12 percent to $6.02-1/4. Wheat erased earlier gains fed by good export demand for top quality wheat such as spring wheat traded on the Minneapolis Grain Exchange, amid expectations of poor quality production in Australia, the world's fourth largest exporter.
"When you start seeing the quality wheat being affected for 2011/12 season, it is going to be bullish as premium quality is in short supply," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore. "At some point, market is going to ask whether this slide in grains is sustainable and at some point buyers are going to start booking some supplies."
CBOT December wheat was off 0.3 percent to $6.00-1/4 a bushel, while March was 0.08 percent higher at $6.02. January soyabeans showed stronger gains, up 0.5 percent to $11.33-3/4 a bushel. Net export sales of all varieties of US wheat slipped 18 percent from the previous week's two-month high but were near the high end of trade forecasts for 350,000 to 550,000 tonnes.
Corn and soyabean markets are struggling amid strong competition from low-cost producers like Ukraine and prospects of a bumper production in South America. US soyabean export sales fell last week to the lowest point in a month while corn sales were about steady in a trading week abbreviated by the US Thanksgiving Day holiday, according to weekly US Agriculture Department data released on Thursday. Sales of both commodities were generally weaker than expected.
Ukraine's grain exports jumped to 2.2 million tonnes in November from about 1.0 million in October due to increased demand, the Agrarian Confederation grain lobby group said. Soyabean traders were watching developments in the key South American producers, which will harvest in early 2012.
Argentine farmers made good progress on 2011/12 soyabean sowing in the last week, thanks to favourable weather and good soil moisture conditions, the Buenos Aires Grains Exchange said on Thursday. The South American country is the world's top supplier of soyaoil and soyameal and the No 3 soyabean exporter. Argentina's 2011/12 soya crop should reach 52 million tonnes, up from 49.4 million tonnes harvested in the previous season, the head of the Acsoja industry group said earlier this week. Brazil's 2011/12 soyabean crop, currently being planted, will amount to 75 million tonnes, unchanged from the previous estimate, grain analysts Informa Economics FNP projected.