Grain futures - Weekly outlook: December 5 - 9

Forexpros - U.S. corn and soybean prices declined on Friday, paring weekly gains as concerns over a slowdown in demand for U.S. supplies drove prices lower, while wheat futures rallied to a two-week high after stronger-than-expected U.S. export sales data.

On the Chicago Mercantile Exchange, corn futures for March delivery traded at USD5.9538 per bushel by close of trade on Friday, gaining 1.21% over the week. Earlier in the day, prices fell to as low as USD5.9388 a bushel, the lowest since November 25.

Agricultural commodities shrugged off outside influences on Friday, instead focusing on market fundamentals.

Corn prices slumped to a one-week low after China's National Bureau of Statistics said the nation's grain production rose 4.5% to a record 571.21 million metric tons in the 2011-12 marketing season.

Total corn output rose to 191.75 million metric tons, up 8.2% from a year earlier and above the U.S. Department of Agriculture's official estimate of 184.5 million tons.

The upbeat crop outlook in China, which is the world's second biggest consumer of the grain, added to worries that the country would import less corn from the U.S. and increase its reliance on domestic supplies.

Corn futures came under additional pressure after the USDA said that corn exports inspected at U.S. ports in the week ended November 24 totaled 13.9 million bushels, significantly below expectations of 22.6 million bushels.

Meanwhile, Ukraine's Agrarian Federation said that the country's grain exports rose to 2.2 million tonnes in November, up from approximately 1.0 million in October due to increased demand.

Ukraine is forecast to become the world's third largest corn exporter in the 2012-13 marketing season, according to the USDA.

Elsewhere, soybeans for January delivery rose 1.38% on the week to settle at USD11.3612 a bushel by close of trade Friday. Prices rose to as high as USD11.4400 a bushel earlier in the day.

USDA data showed that U.S. soybean export sales totaled 18.0 million bushels in the previous week, nearly tripling estimates for sales of 6.8 million bushels, as importers boosted purchases after prices dropped to a 13-month low in the preceding week.

However, prices moderated gains as some mild profit taking emerged amid ongoing concerns over increasing competition for U.S. soy exports.

Industry research group Informa Economics estimated Friday that Brazil's soybean harvest will total 75 million tons, unchanged from a previous estimate. Brazil is the world's second largest soy exporter, trailing only the U.S.

Traders have been focusing on demand because the U.S. corn and soybean harvests are finished.

Elsewhere on the Chicago Board of Trade, wheat for March delivery rallied 7.66% over the week to settle at USD6.2625 a bushel on Friday.

Earlier in the day, prices rose to a two-week high of USD6.3125 a bushel after the USDA said that U.S. farmers sold 18.5 million bushels of wheat in the preceding week, beating expectations of 11.2 million bushels.

Prices came off their highs after China said that its wheat output rose by 2.4% from a year earlier to 118 million tons in the 2012-13 marketing season.

Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.

Also Friday, the U.S. Department of Labor said that the unemployment rate dropped unexpectedly to a two-and-a-half year low of 8.6% in November, as the U.S. economy created 120,000 new jobs.

However, risk sentiment remained on the back foot amid lingering concerns over whether the euro zone's bailout fund, the European Financial Stability Facility, can contain the region's debt crisis. Speculation over a potential downgrade of Spain also weighed.

In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, the U.S. Department of Agriculture's weekly report on U.S. crop progress scheduled for Monday and U.S. export sales on Thursday will also be in focus.


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