US wheat rebounded on Friday off a six-month low hit a day earlier, as US government data showed the biggest weekly export sales in nearly two years.
Soybeans pared gains and corn eased after the US Department of Agriculture's weekly export data revealed sales below trade expectations. US wheat exports totalled more than 1 million tonnes, the highest level since January 2011, and easily exceeded a range of trade estimates between 500,000 and 700,000 tonnes.
The robust wheat sales are due to US supplies being priced at a discount to competitors' wheat after values dropped steadily this month, said Terry Reilly, senior commodity analyst at Futures International in Chicago. "This is the beginning. The US is a pretty good shop for global importers to look to," he said. "Ukraine and Russian wheat exports have considerably slowed during December but more importantly US prices are now fairly competitive."
Chicago Board of Trade March wheat rose 5-1/4 cents or 0.7 percent to $7.77-1/2 a bushel by 8:38 am CST (1438 GMT), off a six-month low of $7.64-1/2 hit on Thursday. March wheat is on track for a drop of nearly 2 percent this week. This would bring its slide for the month to about 8 percent - the biggest decline in more than a year for the contract.
The strong export sales will help wheat prices rebound somewhat for the end of the year, said Ken Ball, a commodities broker at PI Financial Corp in Winnipeg. "The wheat market has been plastered pretty hard on liquidation. So many people got heavily long and then had to run for cover, but now with a good week (of sales) like that, anybody that's short is not going to leave all that money on the table." US export sales were disappointing for corn and soybeans. Net soybean sales amounted to 87,000 tonnes, below a range of trade expectations from 100,000 to 300,000 tonnes. That miss was tempered by the USDA separately reporting a sale of 165,000 tonnes of US soybeans to China.
"Individual sales announcements this week and this morning, while not huge, still keep the bean numbers looking solid," Ball said. Net corn sales totalled 104,300 tonnes, down from a trade estimate range of 150,000 to 300,000 tonnes. January soybeans were up 1/2 cent at $14.19 per bushel, while March corn slipped 1/2 cent to $6.91 a bushel. Soybeans and corn are down 0.8 and 1.6 percent respectively for the week. The market is also watching weather patterns.
Cold temperatures hit southern US Plains hard red winter wheat regions this week, raising the threat of crop damage from winterkill. The US crop quality hit a record November low following the worst drought in 56 years. However, prospects for the South American soybean crop look increasingly bright, with wet areas of Argentina expected to turn drier in the next two weeks, easing concerns about excess moisture, while welcome rains were forecast later this week and next for parts of central Brazil. Investors were closely watching for progress in US budget negotiations, with a year-end deadline approaching on Monday before a wave of tax increases and spending cuts automatically kicks into place.
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