Chicago soybeans rose for a third straight session on Friday, and corn firmed, buoyed by the U.S. Federal Reserve's announcement of a new round of stimulus
measures which investors hope will improve the demand outlook for raw materials.
The gains, however, were capped by an decline in demand from top consumer China which has taken the steam out of a recent rally in prices triggered by the worst drought in more than five decades that has ravaged crops across the U.S. grain belt.
Commodities and Asian shares rose on Friday while the dollar remained weak against other major currencies after the Fed said it would pump $40 billion a month into the world's largest economy until the U.S. jobs market improves, reviving the appeal of risky assets that have suffered for months from uncertainty
about global economic growth.
"Soybean and corn prices are reacting positively to the Fed move, but slowing exports are a concern," said Ker Chung Yang, commodities analyst at Phillip Futures Singapore.
"The rally has stretched since June, so the markets are looking at how demand is reacting to this."
Soybeans have gained around 1 percent this week, rising for six out of seven weeks on fears that the drought will further reduce supplies as indicated on Wednesday by a U.S. Department of Agriculture (USDA) report.
Corn is down nearly 3 percent this week, falling for a third consecutive week as demand weakens. Wheat is largely unchanged so far this week after falling 1.7 percent last week.
On Friday, Chicago Board of Trade new-crop December corn rose 0.2 percent to $7.75-1/2 a bushel by 0323 GMT while November soy rose 0.1 percent to $17.49-3/4 a bushel. December wheat was unchanged at $9.02 a bushel.
The Fed's move will likely accelerate the risk-positive momentum at work since the European Central Bank's bond-buying scheme to get borrowing costs down for euro zone members was approved by Germany's constitutional court.
SLOWING DEMAND
On the demand side, soybean export premiums at the U.S. Gulf were mostly steady in muted trade as demand from top importer China has slowed due to high import prices and poor crush margins at Chinese plants.
Chinese crushers bought nearly all of the 400,000 tonnes of soybeans offered in a bi-weekly auction from government stocks as prices were below import costs.
"China is also diversifying its sources of cooking oil with a switch to rapeseed oil and some other substitutes," Ker said.
China imported 4.42 million tonnes of soybeans in August, the lowest in 6 months, as record-high prices and reduced global supplies cut demand in the world's top importer of the oilseed.
The USDA in its closely watched report estimated this year's U.S. soybean harvest at 2.634 billion bushels, down from last month's estimate of 2.692 billion and below analysts' average estimate of 2.657 billion.
Ending soybean stocks next summer were forecast to be the lowest in nine years at 115 million bushels, unchanged from the August estimate.
The U.S. corn harvest was forecast at 10.727 billion bushels, down slightly from last month's estimate of 10.779 billion but above analysts' average estimate of 10.38 billion.
Egypt, the world's top wheat importer, bought 235,000 tonnes of Russian, French and Ukrainian wheat for Nov. 21-30 shipment.
It was the seventh tender in about a month by Egypt, which has been snapping up supplies as a drought reduces the Russian harvest and dry weather trims output in Australia.
Prices at 0323 GMT
Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 902.00 0.00 +0.00% -1.20% 874.48 55
CBOT corn 775.50 1.75 +0.23% -5.86% 767.76 40
CBOT soy 1749.75 2.50 +0.14% +7.26% 1588.87 57
CBOT rice $15.24 $0.14 +0.96% -4.27% $15.48 48
WTI crude $98.98 $0.67 +0.68% +6.02% $89.28 78
Currencies
Euro/dlr $1.302 $0.073 +5.92% +5.94%
USD/AUD 1.057 0.002 +0.16% -0.01%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential
