Corn, Wheat Fall as U.S. Export Sales Drop After Price Rallies

By Jeff Wilson

Jan. 8 (Bloomberg) -- Corn and wheat fell, capping the biggest two-day declines in a month, as demand for U.S. supplies ebbed following four-week price rallies.

Corn export sales were 260,597 metric tons in the week ended Jan. 1, down 56 percent from the previous four-week average, the U.S. Department of Agriculture said. Wheat sales in the week plunged 90 percent to 41,850 tons from the previous week.

“The export sales are very poor and will keep the market defensive,” said Greg Grow, director of agribusiness for Archer Financial Services in Chicago. “The trend in exports shows declining demand.”

Corn futures for March delivery fell 9.75 cents, or 2.3 percent, to $4.0675 a bushel on the Chicago Board of Trade. The price has dropped 15 percent in the past year.

Wheat futures for March delivery fell 0.75 cent to $6.125 a bushel. The grain was down 33 percent from a year ago.

Both commodities dropped almost 5 percent in two days. Corn jumped 33 percent in the four weeks ended Jan. 2, while wheat gained 28 percent.

Egypt, the world’s largest wheat importer, agreed to buy 56,000 metric tons of Russian grain today. Egypt paid $181 a ton, or $4.925 a bushel, for two cargoes for shipment Feb. 1 to 10, said Nomani Nomani, deputy chairman of the country’s General Authority for Supply Commodities.

“U.S. supplies relative to Black Sea origins are very expensive,” said Robert Lekberg, a market analyst for Penson GHCO in Chicago.

China’s Corn Crop

China, the world’s second-biggest corn grower, said its crop will be a record 165.5 million tons, 8.7 percent bigger than a year ago. The estimate was up 6.1 percent from the National Grain and Oils Information Center’s projection in December. Favorable weather in the main growing area in the northeast is helping yields, the center said today.

China will allow 500,000 tons of the grain to be exported this year, about 90 percent less than in previous years, as the government seeks to ensure domestic supplies, three people familiar with the situation said last month.

“China now has a mild surplus supply situation,” Lekberg said. “The potential is there for them to export more than the quotas they have already announced.”

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, government figures show. Wheat is the fourth- biggest at $13.7 billion behind soybean and hay.

The U.S. is the world’s biggest corn and wheat exporter.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.