March 11, 2011

 

US corn export sales hit six-week low as prices rocket

 

 

Export sales of US corn slid below one million tonnes last week for the first time in six weeks as prices soared to 2-1/2-year highs followed by a slackened demand, but sales are poised to rebound, according to analysts.

 

Sinking corn prices this week have drawn some previously reluctant buyers back into the market after last week's sales less than one million tonnes snapped a five-week run above that level that matched the longest such streak since late 2007.

 

Benchmark US corn futures on the CBOT climbed as high as US$7.35 a bushel last week, reaching the loftiest level for a front-month contract since July 2008. Futures have since fallen for five consecutive trading days.

 

"I wouldn't be surprised to see this pace bounce back again next week, especially with the price reduction we've had here," said Tim Emslie, an analyst with Country Hedging.

 

Net corn export sales fell to 776,000 tonnes in the week ended March 3, with sales of 477,200 tonnes for shipment in the current marketing year, which ends on August 31. New-crop sales of 298,800 tonnes were the largest to date for 2011/12.

 

Japan and Mexico, the top two US corn importers, made their smallest purchases in several weeks last week, but traders said demand inquiries from both key markets had since improved.

 

Demand by No. 3 buyer South Korea also rebounded this week, after a recent slowdown due to a reduction in its livestock herd following a severe disease outbreak.

 

"The high prices had a major impact on the numbers in today's report, but next week we see a rebound in old-crop (sales) because of the drop in futures prices," said Terry Reilly, an analyst with Citigroup.

 

"If we continue to drop toward the US$6.50 level in the May contract, we should see a pretty steady flow of major importers back into the market," he added.

 

Still, the lagging pace of actual export loadings of corn to date may be a signal that the current government forecast for the full year's exports may be too high.

 

Shipments last week were the largest of the marketing year to date at 1.2 million tonnes, a pace that analysts said must be maintained through the rest of the marketing year to reach the USDA's 2010/11 export target of 49.53 million tonnes.

 

Shipments had averaged less that 800,000 tonnes per week in the first half of the marketing year, according to USDA data.

 

Soy export sales fell 26% from the previous week's three-week high, but were within trade expectations as global demand continued a seasonal shift from the United States to South America.

 

Net sales in the week ended March 3 totaled 470,100 tonnes, within trade expectations for 350,000 to 500,000 tonnes. China was the top buyer, with a net 303,200 tonnes in old-crop purchases and 57,000 tonnes in new-crop purchases.

 

US wheat export sales last week were little changed from the prior week at 657,200 tonnes.

 

But the sales were below trade expectations for 750,000 to 1.1 million tonnes as demand eased after a flurry of global buying in January and February, triggered by food inflation worries and unrest in the import-dependent Middle East and North Africa.