Friday, March 5, 2010

GRAINS-CBOT soy, grains firm ahead of US jobs data

* Steady dollar supports in subdued trade

* Grains stay forex-sensitive, bearish fundamentals cap

* Corn may find support in planting hitches, ethanol demand

* Coming up: U.S. February non-farm payrolls at 1330 GMT

(Updates with quotes, European trading, previous SYDNEY)

By Bruce Hextall and Gus Trompiz

PARIS/SYDNEY, March 5 (Reuters) - Chicago soybean and grain futures clawed back ground on Friday as a steady dollar supported soft commodities after a day of heavy losses.

Gains were modest as the market awaited the release later on Friday of the U.S. employment report for February, seen as a key indicator of the pace of economic recovery.

Grain markets were also waiting for direction from next Wednesday's closely watched World Agricultural Supply and Demand Estimates report from the U.S. Department of Agriculture.

"Currrency and grains markets will be choppy in front of those U.S. employment numbers tonight and if the numbers point to an improving U.S. economy you will see a rally in global equities markets and the dollar but grains could fall," said Garry Booth, an adviser at MF Global Australia.

A rising dollar makes U.S. priced commodities more expensive for buyers holding other currencies and tends to push prices of those commodities lower, as happened in Chicago on Wednesday.

Bearish fundamentals continued to cap gains, including upgrades to projected Argentine soybean and corn crops by Informa Economics on Thursday.

The respected analytical firm raised its estimate of Argentina's 2009/10 soybean production to 55.0 million tonnes and its corn production to 21.0 million tonnes, trade sources said..

In Brazil, meanwhile, the soybean harvest is gathering pace, encouraging China, the world's largest soy importer, to switch to buying supplies from the South American nation, the No. 2 soybean exporter, rather than from the United States.

China made no purchases of U.S. soybeans in the latest week.

CORN UPSIDE

Chicago Board of Trade soybeans for March delivery rose 0.70 percent to $9.39 per bushel by 1222 GMT. The contract expires on March 12.

Corn fared a little better with the March contract, which expires on March 12, rising 0.87 percent to $3.75-1/4, helped by a rising oil price.

Quality issues with the U.S. crop, strong ethanol demand and the potential planting problems could all boost corn prices in the coming weeks, Morgan Stanley analysts said in a note.

"We believe the historical tendency of prices to move higher from March to June will be even more pronounced this year," they said, seeing corn breaking through current resistance at $3.80.

Corn is a key feedstock for U.S. biofuel production.

Morgan Stanley said the USDA could raise its estimate for the 2009/10 U.S. corn crop in its March 10 report, contrary to previous expectations of a cut, but this would not necessarily weigh on the market.

"Despite large corn stocks, we reiterate the need to see an increase of almost 3 million acres of corn to be planted YoY to keep balances steady for 10/11."

On wheat markets, wheat for March delivery added 0.65 percent to $5.05-1/4 after plunging 2.6 percent on Thursday.

On Euronext, milling wheat futures were virtually unchanged to stay near contract lows. March, which expires on Wednesday, was off 0.21 percent at 119.25 euros a tonne and May flat at 123.50 euros.

With low prices and hefty grain supplies continuing to draw offers to public stores under Europe's intervention scheme, operators said any market rebound would depend on a weather incident or spillover support from corn or soy. * Prices as of 1222 GMT Product Last Change Percent Move End 2009 Ytd Percent CBOT wheat 493.25 2.75 +0.56 541.50 -8.91 CBOT corn 375.25 3.25 +0.87 414.50 -9.47 CBOT soybeans 939.00 6.50 +0.70 1039.75 -9.69 CBOT rice 12.92 -0.08 -0.62 14.57 -11.32 Paris wheat 119.25 -0.25 -0.21 131.25 -9.14 Paris maize 127.50 0.25 +0.20 135.00 -5.56 Paris rapeseed 295.50 1.00 +0.34 287.50 2.78 Crude oil 80.67 0.46 +0.57 79.36 1.65 Euro/dlr 1.36 0.00 +0.02 1.43 -5.13 *Front month contracts. CBOT contracts in cents per bushel except rice which is in dollars per hundredweight. Paris wheat in euros a tonne. (Editing by James Jukwey)

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