September 6, 2012 / 3:15 PM / 8 years ago

GRAINS-Wheat soars on hopes of export demand shifting to US

* Wheat soars after Egypt tender results
    * Expectations for pick up in demand for US wheat
    * Soybeans pare loses on bargain buying
    * Corn higher on poor yield


    By K.T. Arasu and Sam Nelson
    CHICAGO, Sept 6 (Reuters) - Chicago wheat futures soared
more than 2 percent on Thursday amid expectations that world's
No. 4 exporter Russia could soon  run out of supplies, forcing
some demand to shift to the United States, the top shipper of
the grain.
    The expectations stemmed from a large purchase of wheat from
the Black Sea region, including Russian, by Egypt's main
state-run wheat buyer, the General Authority for Supply
Commodities, better known in trade circles by its acronym GASC.
    While the purchase of 475,000 tonnes of wheat from Russia,
Romania and Ukraine at an international tender highlighted how
high prices had made U.S. supplies uncompetitive, it also raised
the question if Egypt, the world's top wheat importer, was
trying to grab as much Russian wheat as possible before any move
by Moscow to limit sales -- as persistently speculated.
    Russia has repeatedly denied that it would ban exports --
like it did in 2010 after a historic drought and sparking a
major rally in prices -- due to a poor crop this year.
    Analysts said that Russia could run out of supplies for the
export market if it maintains its current pace of sales -- it
has sold Egypt's GASC 840,000 tonnes of wheat in the agency's
five back-to-back tenders that began Aug. 10.
    GASC Vice Chairman Nomani Nomani told Reuters in Cairo that
rising prices for Russian wheat could make supplies from other
countries more price competitive and said he wanted to clarify
how much Russian wheat would be available for export.
    Leading Russian grain analyst Dmitry Rylko, head of the
Institute for Agriculture Market Studies told a conference in
Moscow that Russia could import as much as 2.5 million tonnes of
wheat from neighbor Kazakhstan. 
    
    COULD USDA RAISE SOYBEAN YIELD?
    "Russia could be out of the market by the end of October,"
said grains analyst Dan Basse of AgResource Co in Chicago whose
has clients in the Black Sea region. "People could be forced to
buy from the United States or Canada."
    December wheat futures at the Chicago Board of Trade
e nded 2.8 percent higher at $8.9 1- 3 / 4, with the market adding to
earlier gains after the GASC tender results were announced.
 
    Paris wheat futures ended up 0.6 percent at 261.5
euros per tonne.
    CBOT November soybeans ended 1/2 cent lower at $17.4 7 
per bushel, while December corn r ose 1 percent t o
$ 7.98-1 /2.
    Soybean futures fell for a second consecutive session on
expectations that recent rainfall had helped to recoup some
losses from the worst drought in half a century, but the market
pared the losses near the close on bargain buying.
    There were some expectations for the USDA to raise its
estimate of the soybean yield in its next update of the crop in
its supply-demand report on Sept. 12 d ue to rains in recent
weeks in the northern and eastern Midwest helping the crop.
    "Soybeans are down on the FC Stone estimate that actually
increased soybean production, the rains apparently have
stabilized beans but not corn," a trader said.
    Soybean futures were also weighed by a sharp drop in prices
in the cash markets before the Midwest harvest gets underway and
on expectations that farmers will step up sales.
    Closely-followed trade house INTL FC Stone on Wednesday
pegged the 2012 U.S. soybean crop at 2.739 billion bushels,
above the U.S. government's forecast for 2.692 billion. However,
the firm pegged corn output at 10.607 billion bushels, below the
government forecast for 10.779 billion.
    Corn futures were higher on forecasts for low U.S. corn
output this year following the summer long drought and
relentless heat that slashed corn yield prospects.
    A large sale of U.S. corn totalling over 200,00 tonnes to an
unknown destination as reported by the U.S. Department of
Agriculture also helped support prices. E xport demand had been
dented by price rising to record highs this summer.

    UN SLASHES WORLD GRAIN SUPPLY ESTIMATE
    The United Nations' food agency cut sharply its outlook for
world grain supply due to the impact of drought in the United
States and Black Sea countries, highlighting tensions that are
maintaining prices at historically high levels.
    Drought-affected crops in the United States and Black Sea
producers like Russia will whittle down global grain supply this
season and are keeping prices high, the UN's Food and
Agriculture Organisation(FAO) said.
    "Although we should remain vigilant, current prices do not
justify talk of a world food crisis. But the international
community can and should move to calm markets further," FAO
Director General Graziano da Silva said. 

 Prices at 2:21 p.m. CDT (1921 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  797.25     7.50   1.0%   23.3%
 CBOT soy                  1744.50    -3.50  -0.2%   45.6%
 CBOT meal                  531.80    -0.20   0.0%   71.9%
 CBOT soyoil                 56.78    -0.58  -1.0%    9.0%
 CBOT wheat                 872.00    26.25   3.1%   33.6%
 CBOT rice                 1438.00   -29.50  -2.0%   -1.5%
 EU wheat                   261.50     1.50   0.6%   29.1%
 
 US crude                    94.98    -0.38  -0.4%   -3.9%
 Dow Jones                  13,258      211   1.6%    8.5%
 Gold                      1700.24     7.20   0.4%    8.7%
 Euro/dollar                1.2636   0.0037   0.3%   -2.4%
 Dollar Index              81.0880  -0.1470  -0.2%    1.1%
 Baltic Freight                675       -9  -1.3%  -61.2%
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