LONDON (Commodity Online): CBOT grain prices edged higher on Tuesday, led by wheat, as Italy successfully completed its bond auction. Front-month December Corn contract closed 6.25 cents higher on the day at $5.98/bushel, while the January soybeans contract closed modestly higher at $11.25/bushel.
CBOT Wheat prices made its largest intraday gain in a month, climbing 19.75 cents higher to close at $5.95/bushel. However, the complex is trading lower this morning as the vagaries of macroeconomic sentiment continue to drive price direction.
Macro concerns aside, the wheat market could face additional pressure from improved crop conditions and export competition. The USDA stated that US winter wheat condition was 52% good to excellent, compared with 50% a week ago and 47% last year.
It was reported that Argentina's government approved an additional 2.7 mt of 2010/11 wheat for export, increasing the total to 11.1 million tons (mt). The agriculture ministry also raised its forecast for 2011-12 Wheat production to 13.5 mt, up from the previous estimate of 12 mt. Further, Argentina's farmers are expected to grow by 52-53 mt of soybeans during the 2011-12 season, the second-largest crop on record. For corn, increasing supplies from South America and Ukraine are likely to reduce demand for the US crop.
Across the soft commodities only cocoa prices eased as ample supplies pressured the market, while the rest of the complex firmed. The International Cocoa Organisation has estimated there was a global cocoa surplus of 325 Kt in 2010/11 although a more balanced market is forecast for 2011/12.
Coffee prices gained 0.24%, buoyed by diminished crop outlooks in key producers, Brazil and Columbia, while sugar rose 1.6%, supported by a weaker dollar. It was reported that Thailand, the world's second-largest Sugar exporter, has started its 2011/12 crushing season and is forecast to produce a record 9.9 mt this year and may export 7.5 mt in 2012.
