Chicago grain futures rally on robust demand

Chicago wheat futures reversed losses on Thursday, supported by its shrinking global supplies and rising demand for U.S. export corn and soybean, both of which jumped the most this month.

December corn rose 12 cents, or 2.9 percent, to 4.32 U.S. dollars per bushel. December wheat added 8 cents, or 1.2 percent, to 6.885 dollars per bushel. November soybean climbed 15.5 cents, or 1.6 percent, to 10.145 dollars per bushel.

USDA announced in a report on Thursday that U.S. exporters sold 1,735,900 tons of corn last week, which is much higher than expected. USDA also announced a sale of 156,527 tons of U.S. corn to Japan for delivery in the year starting Sept. 1 which is not included in the weekly sales report.

The International Grains Council has raised its 2010/11 world production estimates for corn by 6 million, to 829 million tons, which is much higher than 809 million a year ago. But the IGC also lowered the ending stocks estimates of corn due to the rising usage projection.

Trader noted that the robust global demand for U.S. corn along with weaker dollar and stronger crude oil price have all contributed to giving corn a strong lift on Thursday. But the news that the planted area for corn in Argentina may increase by 9 percent from last year has added downward pressure on corn price.

USDA said in its report that last week's export sales of wheat, which came in at 1,077,600 tons, has surpassed 1 million tons for the third straight week.

Meanwhile, IGC slashed its projection of 2010/11 world wheat production by 7 million to 644 million tons, which is far less than the record demand of 657 million tons. IGC also saw Russia's wheat crop at just 44 million tons, down from a previous forecast of 50 million and sharply below 61.7 million a year ago.

Trader noted wheat managed to end a 2-day losing streak on speculations that the wider deficit in the global wheat market would boost demand for U.S. wheat supplies, and adverse weather in world leading exporter like Russia and EU would continue to affect yield prospects.
(Source:xinhua)