Chicago corn futures price continued to rally on Friday, supported by higher-than-expected weekly export sales data. Wheat followed corn higher, but soybean lost some ground as new forecasts predicted more rain in parts of the drought-hit Argentina grain belt.
The most active corn contract for March delivery added 5.5 cents, or 0.9 percent, to close at 6.115 U.S. dollars per bushel. March wheat jumped 4.75 cents, or 0.8 percent, to 6.105 dollars per bushel. March soybean lost 10 cents, or 0.9 percent, to close at 11.87 dollars per bushel.
U.S. Department of Agriculture announced Friday that last week' s net corn export sales came in at 759,900 metric tons which was higher than expected. And soybean weekly export sale reached 991, 100 metric tons which was well above trade expectations and hit a 3-month high.
Weather forecast showed that the driest area of southern Brazil will get some badly needed moisture this weekend. Argentina looks to see 0.5 to 2 inches of rain with more than 60 percent coverage, which would be the second timely rain in 10 days.
"It could be too late for corn. There's talk it has been the worst drought in 70 years," said Tim Hannagan, a grain specialist with PFGbest in Chicago.
The 2008 drought cut production of corn (in Argentina) to 15 million metric tons. It's currently forecast at 21 million metric tons by the Argentine grain exchange, down from 26 million metric tons last month. Our recent USDA report pegged it at 26 million metric tons although USDA is expected to cut production further in its February monthly crop report, said Hanngan.
But the forecast with increased rain totals and coverage for the next 5 days in Argentina and more rains at the back end of the 6 to 10 day forecast has triggered aggressive selling in soybean market, as many traders believed that local soybeans crops have the tendency to bounce back.