May 27, 2011

Soaring prices of US grains erode corn and wheat sales

US corn export sales declined 32% last week and wheat sales dropped 46% as a sharp spike in prices chilled demand, although sales were within the range of trade forecasts, according to a USDA report released on Thursday (May 26).

Corn futures on CBOT climbed nearly 12% last week on worries that late US planting would drag down production at a time when stocks were the tightest in 15 years.

Wheat prices jumped almost 16% last week amid concerns about drought-reduced output in the southern US Plains and parts of western Europe and China, and while overly wet weather stalled US spring wheat seeding.

The USDA reported net corn sales of 779,600 tonnes in the week ended May 19, 726,700 tonnes of which were for shipment in the current marketing year that ends on August 31.

Analysts had expected sales between 500,000-900,000 tonnes. Japan was the week's largest buyer with 208,200 tonnes in old-crop purchases.

USDA also reported 116,800 tonnes in corn sales to China, all of that switched from previous sales reported to unknown destinations. The sales were a part of a 1.25 million-tonne sale to unknown buyers announced by the USDA in March, which many players linked to China at the time, traders said.

Net US wheat export sales featured a net decline of 28,300 tonnes in 2010-11 marketing year sales and a net increase in 2011-12 sales of 460,600 tonnes, the USDA said.

The combined marketing year sales were the lowest in a month, but were within the range of trade estimates for 400,000-700,000 tonnes.

Soy export sales, meanwhile, remained seasonally slow, slipping 5% from the prior week to 157,000 tonnes, near the low end of trade expectations for 150,000-325,000 tonnes.