US corn, soyabean and wheat futures rose on Friday, with corn and wheat rebounding from near one-month lows as investors bought in to a market that's been reeling from the government's bigger-than-expected supply outlook last week. "The grains have been under just tremendous selling pressure here since the crop report," said Dewey Strickler, president of AgWatch Market Advisors.
"That has really caused the market to have a short covering rally." Tight cash markets and a weakening dollar also helped support grains and soya markets while signs of renewed from top buyer China added further fuel to soyabean futures. Hopes for improved export interest as strong European bond auctions eased concerns over the region's debt crisis and raised investor confidence about buying into risky markets.
The US Agriculture Department said exporters sold US corn to Mexico and South Korea. China booked 120,000 tonnes of US soyabeans and there was talk of more purchases coming soon due to a slow harvest of early-planted soyabeans in Brazil, the world's No 2 exporter of the oilseed after the United States. There was also talk that the yield count in the early harvested soyabeans in Brazil was lower than expected. The stepped up purchases by China could be due to the approach of the Lunar New Year holiday next week.
Chicago Board of Trade March soyabean futures closed up 13-1/2 cents at $11.97 a bushel. CBOT March wheat rose 13-1/2 cents to $6.05-3/4 but failed to break through Wednesday's high. CBOT March corn was up 12-1/2 cents at $6.06 a bushel. The weak dollar also contributed to the bullish attitude around US commodities on Thursday.
"It is spillover from the outside markets," said Carolyn Farndell, senior investment associate at RBC Dain Rauscher. "There seems to be some optimism coming back in about world-wide economic activity." Strong demand at Spanish and French government bond auctions added to a buoyant mood in equity markets and lifted the euro to a two-week high against the dollar as fresh steps to contain the European debt crisis boosted risk appetite.
Key to the stronger sentiment was news that the IMF would seek to more than double its war chest by raising $600 billion to help countries deal with the fallout from the crisis. Traders also were watching the weather forecast for South America, where hot and dry conditions have devastated crop potential for both corn and soyabeans. Much-needed rain was expected in dry crop areas of Argentina Friday through Tuesday. "Most of Argentina should get 0.5 inch to 1.5 inches which will help relieve stress on crops, but it looks like it will turn dry again so more rains will be needed," said Andy Karst, meteorologist for World Weather Inc.
Karst said the next major weather event in Argentina would probably occur from January 27 to 29. Dryness also was a concern in southern Paraguay, extending into Brazil's Rio Grande do Sul crop region but Karst said those areas should get rains next Tuesday through Wednesday.
Gains in wheat and corn were limited by expectations for rising supplies this year, which the US Agriculture Department forecast in its monthly supply and demand estimates last week. On Thursday, the International Grains Council raised its estimate of the world maize crop by 8 million tonnes due to an improved outlook in China. It also boosted its wheat production forecast by 7 million tonnes.
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