U.S. wheat rallies on export data but corn retreats

Wheat futures rose one per cent on Friday, halting a three-day slide as better-than-expected weekly U.S. export sales triggered a round of short-covering, but the market still posted a weekly loss.

Corn fell as updated weather forecasting models showed better rains for crop areas of Argentina, but soybeans ended higher after a choppy session, supported by firm cash markets.

At the Chicago Board of Trade (CBOT), March wheat ended up eight cents, or was up 4-1/2 cents, or one per cent, at $7.76-1/2 per bushel (all figures US$).

March corn settled down 3-1/2 cents, or 0.5 per cent, at $7.20-3/4 a bushel while March soybeans ended up 5-3/4 cents, 0.4 per cent, at $14.41/bu.

Wheat climbed after the U.S. Department of Agriculture reported export sales of U.S. wheat in the latest week at 647,500 tonnes, including 572,500 tonnes for the current marketing year that began June 1, 2012. The combined-year total topped a range of trade expectations for 350,000 to 550,000 tonnes.

"The export sales today were super for wheat," said Jack Scoville, grains analyst at The Price Group in Chicago. "The wheat demand for soft red wheat ought to be picking up, too, because it’s relatively cheap," Scoville said.

Also, commodity funds hold a net short position in CBOT wheat, leaving the market open to periodic bouts of short-covering.

Ongoing concerns about dry conditions in the southern U.S. Plains hard winter wheat belt added background support.

Parts of the central and southeastern Plains should receive precipitation in the first half of next week, the Commodity Weather Group said in a daily note to clients.

"However," CWG said, "amounts will be too light in the Plains for notable drought relief, and the outlook is a bit drier in the northwestern Midwest today as well."

Despite Friday’s rally, CBOT March wheat posted a weekly loss of 1.9 per cent on profit-taking following a two-week advance.

Corn fell 0.9 per cent for the week after rising for the two previous weeks. Soybeans added 0.8 per cent, the market’s third straight week of gains.

Corn falls

Corn prices fell after updated weather forecasts projected beneficial rain in Argentina, the world’s No. 2 exporter of corn and third-largest soybean supplier. More than a month of consistently hot and sunny weather has left Argentine farmers on edge about crop prospects.

The main U.S. and European weather forecasting models have shown conflicting views about the likelihood of rain in Argentina’s crop areas in early February, but the midday model run of the U.S. model showed welcome precipitation.

"The Argentine weather is turning wetter, and it’s pressuring corn and soybeans," said Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana.

Soybeans drew support from a firm cash soy market, which helped nearby contracts above back months. Cash basis bids for soybeans shipped by barge to the U.S. Gulf export market rose by two cents, to 110 cents over the value of the CBOT March futures contract.

The market also attracted light technical buying after an early sell-off stalled. March soybeans dipped to $14.26 in early moves but failed to drop below chart support at the contract’s 50-day moving average near $14.25.

— Julie Ingwersen is a Reuters correspondent covering agricultural commodities markets in Chicago. Additional reporting for Reuters by Ivana Sekularac in Amsterdam and Naveen Thukral in Singapore.

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