US corn, wheat firm as fall in output predicted

US corn futures held steady yesterday after rising nearly 4 per cent in the previous session ahead of a US government report expected to forecast lower corn output and a sharp reduction in old-crop stocks. Analysts predict the US Department of Agriculture's monthly World Agricultural Supply and Demand Estimates report, due at 1230 GMT, will cut the end 2010-11 estimate for US corn stocks to 706 million bushels from 730 million forecast in May. "While the June WASDE rarely provides too many fireworks, the extreme tightness in US and world grain markets this season will mean any amendments made by the USDA will be critically important," Rabobank said in a report. Chicago Board of Trade corn for July delivery were up 0.03 per cent at $7.64 per bushel by 1116 GMT, following a 3.7 per cent jump on Wednesday, also bolstered by rising oil prices after Opec failed to agree to raise production targets. Prices for the July contract are approaching a record high of $7.88 struck on April 11, when concerns were dominant about delays in planting this year's US crop because of rain. "Our view remains bullish for old-crop prices, with a risk that old-crop supply scarcity lifts nearby [July contract] prices through $8.00/bushel for the first time in history," Rabobank said. Firm corn supported wheat prices. Supply fundamentals for wheat were less tight than for corn, however, even though the US winter wheat crop had struggled because of drought. Wheat for July delivery rose 0.60 per cent to $7.52-1/2 per bushel, adding to a nearly 2 per cent rise on Wednesday when the grain snapped a two-day losing streak. Soybeans for July delivery eased 0.29 per cent to $13.97 a bushel as high prices have turned China away from the US market in recent weeks. The prospects that Russia will return to the export markets after an absence of nearly a year may weigh on wheat prices, along with recent rain in northern Europe, which relieved fears a drought would undermine yields. "Macro events are also supporting prices, with oil prices up and the US dollar weak," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia. The greenback weakened against the dollar as investors geared up for hawkish signals from the European Central Bank, which made US dollar-denominated exports more competitive on world markets. From / Gulf News