October 17, 2010

 

US corn export sales surge to six-week high

 

 

US corn export sales last week nearly doubled from the previous week on strong sales to Mexico, but overall sales were below trade expectations as elevated prices affected demand from other buyers.

 

Soy export sales jumped 17%, but were within trade forecasts. Wheat export sales fell more than 50% to a one-month low as improved crop weather lessened recent worries about tightening global supplies, analysts said.

 

Other than the large corn sale to Mexico, corn exports were smaller than expected as corn prices last week hovered near two-year highs, traders said. Corn prices have since surged even higher after the USDA slashed its 2010 corn yield and production estimates last Friday (Oct 8).

 

"The number was disappointing, more so because we already knew about the sales to Mexico. When you take those sales out, there really wasn't much left," Prudential Bache Commodities analyst Shawn McCambridge said after the USDA released its weekly export sales report.

 

He was referring to the nearly 823,000 tonnes in sales reported by the USDA's daily reporting system last week.

 

"I think it was a combination of sticker shock and a reluctance to chase prices to these levels. Time will tell if that is a good strategy, but I think they feel that there is not a great deal of upside risk," McCambridge said.

 

USDA said corn export sales in the week ended October 7 totalled 906,000 tonnes for shipment in the current marketing year, which began on September 1, and 274,300 tonnes for shipment in the next marketing year.

 

Sales for both marketing years combined were the largest in six weeks but fell short of trade expectations for 1.5 million to 1.8 million tonnes.

 

The week's sales to Mexico were the largest to the No. 2 US corn buyer in 11 months, but sales to other traditional buyers such as South Korea, Egypt and top US corn customer Japan were minimal.

 

Export sales of US soy last week jumped 17% from the prior week, but the sales were within trade forecasts amid merely modest sales to China, the world's top soy importer, and solid sales to other buyers.

 

"Soy sales were within expectations, but it was a good number and it was encouraging that the buying was fairly broad-based," said Mario Balletto, analyst with Citigroup.

 

USDA said soy sales totalled 1.1 million tonnes in the week ended last Thursday (Oct 7), within the range of forecasts for 900,000 to 1.2 million tonnes.

 

China was the top buyer with 583,700 tonnes in purchases, but that volume was its smallest in a month, likely because demand had slowed due to the country's National Day holiday last week. Other large soy buyers last week included the Netherlands, Mexico, Japan and Saudi Arabia.

 

Chinese demand has accelerated this week, spurred by robust soy processing crush margins there, traders said.

 

USDA has confirmed 817,500 tonnes in sales to China this week via its daily reporting system and 278,800 tonnes in sales to undisclosed buyers, which some traders said included at least some sales to China.

 

US wheat export sales last week fell more than 50% to the lowest point in a month as improved crop weather in some major wheat producing areas such as Argentina and the drought-hit Black Sea region have lessened recent worries about tightening global supplies, analysts said.

 

USDA reported export sales of all varieties of US wheat at 377,000 tonnes, below trade forecasts for 500,000 to 700,000 tonnes.