US corn futures up

US corn futures inched up on Friday as strong demand for US exports outweighed concerns about future economic growth after European Union leaders agreed on tighter fiscal rules. EU leaders agreed stricter budget rules for the euro zone on Friday, but failed to secure backing from all 27 countries to change the EU treaty, meaning any deal is now likely to involve the 17 euro zone countries, plus any others that wanted to join.
"People have not been surprised (with the eurozone summit results) People are getting more confident about US exports," said Nicholas Higgins, a Rabobank analyst. "(US exports) numbers last week have been good, and ethanol production has never been stronger. Mexico's crop is poor, Japan has been buying a lot and there has been strong demand from China."
Grains futures, like other commodities such as base metals and oil, have been hit by fears that a global economic slowdown triggered by the euro zone debt crisis could cut demand "There are a lot of risks for corn on downside however if the USD remains elevated and stymies US exports, we need to see a continuation of the improvement this week to support prices in the near term as Black Sea export competition remains strong," Higgins said.
Grains were also waiting for a crop report on Friday, when the US Department of Agriculture is likely to lower its forecast of US corn stocks slightly due to rising feed use and a lacklustre harvest, while raising soya supplies by nearly 10 percent on poor export demand. March Chicago Board of Trade corn futures rose 0.37 percent to $5.02-1/2 a bushel by 1210 GMT, after a slight fall in Asian trade. Corn was heading towards weekly rise after data showed US corn exports last week totalled 708,000 tonnes, much higher than trade estimates.
"The market had been expecting a relatively benign report with respect to corn, possibly a reduction to US export estimates to reflect the sluggish pace so far," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. Corn prices have fallen by more than 15 percent in three months, but signs are starting to emerge in the options market that corn may ready to shake off the recent bearishness and embark on a substantial recovery, according to Reuters market analyst Gavin Maguire. Industry sources said on Friday the Chinese government will buy as much as 12 million tonnes of corn from farmers in the north-east at 2,000 yuan ($310) per tonne to refill depleted state reserves.
CBOT March wheat rose to $5.98-1/2 a bushel, after dropping as low as $5.90-3/4 on Thursday - the lowest level since November 28 - due to ample crop in Australia and Canada, and stiff export competition for US wheat. January soyabeans slipped 0.26 percent to $11.29-1/2, heading for its biggest weekly drop since late November, although soya could benefit from the prospect of dry weather in South America, which may prompt China to turn to the US grain.