GRAINS-Wheat posts steepest rally in 2 months on export optimism

Sat Oct 19, 2013 12:33am IST

* U.S. wheat continues rebound from two-week low this week
    * Technicals, tightening supply/demand picture buoy wheat
    * Corn anchored by harvest, soybeans slip on profit-taking
    * Traders await export data as USDA cancels October report

 (Updates with closing prices and weekly change, adds fund
buying and selling totals)
    By Michael Hirtzer and Karl Plume
    CHICAGO, Oct 18 (Reuters) - U.S. wheat surged nearly 3
percent on Friday, passing $7 per bushel for the first time
since June, as a smaller-than-expected production forecast from
Argentina fed optimism about the demand outlook for U.S.
supplies.
    Corn futures followed wheat higher, touching the highest
level in a week and a half, but failed to hold the gains amid
the ongoing harvest of a likely record-large U.S. crop. Soybeans
eased in a profit-taking setback following strong gains on
Thursday.
    "People still have optimism regarding the pace of wheat
export sales. There were reports of Argentina production being
dropped. If they do have 8.8 (million tonnes), that really
doesn't leave much for export," said Shawn McCambridge, an
analyst at Jefferies Bache in Chicago.
    Brazil has stepped up purchases of U.S. wheat after frost
damaged crops in neighbouring Argentina, usually the source of
much of Brazil's wheat imports.
    Late on Thursday, Argentina's agriculture ministry estimated
wheat production at 8.8 million tonnes. The estimate, released
shortly before the close of trading, was sharply lower than the
12 million tonnes estimated by the U.S. Agriculture Department
last month. 
    Chicago Board of Trade December wheat jumped 19 cents,
or 2.9 percent, to $7.05-3/4 per bushel, its largest daily gain
since late August. For the week, wheat gained 2 percent.
    A bullish background for wheat included Chinese buying of
U.S. and Australian wheat in recent weeks after suffering crop
damage earlier this year, and crop damage in Argentina.
    The price of Argentine wheat has soared on the local market
as millers there scramble for scarce supplies ahead of the
2013/14 harvest, which follows a thin 2012/2013 crop.
 
    Additional support stemmed from a threatened rail strike in
Canada that could hamper exports of its massive crop and shift
some business to the United States. 
    
    USDA EXPORT DATA AWAITED
    CBOT December corn shed 1-1/2 cents, or 0.3 percent,
to $4.41-1/2 a bushel after earlier rising as high as $4.47-3/4.
CBOT November soybeans fell 2 cents, or 0.2 percent, to
$12.91-1/4 a bushel. Both commodities gained 1.9 percent in the
week.
    Commodity funds sold an estimated net 3,000 corn contracts
and 2,000 soybean contracts on the day, and bought a net 6,000
wheat contracts, trade sources said. 
    Investors were awaiting the release of nearly three weeks of
delayed USDA data, including export sales figures likely to show
nearly 3 million tonnes of soybeans and more than 2 million
tonnes of corn were sold to overseas buyers. China was a major
buyer of both commodities. 
    The data were delayed due to the partial U.S. government
shutdown.
    USDA said it will release the first of three missed export
sales reports at 2 p.m. CDT (1900 GMT) on Friday and will
announce the schedule for the remaining reports later.
    The USDA said it was cancelling an already delayed October
crop production report, originally scheduled for Oct. 11, the
first time it has scrapped the report in 147 years. The next
USDA crop report is scheduled to be released on Nov. 8.
 
    Some delays this week in harvesting the U.S. corn and
soybean crops have lent short-term support to corn and soybeans,
but prices remain anchored by expectations for a record-large
U.S. corn crop and the fourth-largest soy crop.
    
    
 Prices at 1:49 p.m. CDT (1849 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  441.50    -1.50  -0.3%  -36.8%
 CBOT soy                  1291.25    -2.00  -0.2%   -9.0%
 CBOT meal                  410.10    -2.90  -0.7%   -2.5%
 CBOT soyoil                 41.68     0.56   1.4%  -15.2%
 CBOT wheat                 705.75    19.75   2.9%   -9.3%
 CBOT rice                 1529.00   -16.00  -1.0%    2.9%
 EU wheat                   204.25     4.75   2.4%  -18.4%
 
 US crude                   100.80     0.13   0.1%    9.8%
 Dow Jones                  15,405       34   0.2%   17.6%
 Gold                      1315.86    -3.23  -0.2%  -21.4%
 Euro/dollar                1.3679   0.0003   0.0%    3.7%
 Dollar Index              79.6530   0.0040   0.0%   -0.1%
 
 
 (Additional reporting by Gus Trompiz in Paris and Naveen
Thukral in Singapore; Editing by David Gregorio, Jim Marshall
and John Wallace)
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