Grain futures - Weekly outlook: January 23-27

Forexpros - U.S. corn and wheat futures rose on Friday, climbing to multi-session highs as strong demand for U.S. supplies and weather-related concerns boosted prices, while soybeans declined on Friday, paring a weekly gain, amid easing concerns over crop damage in South America.  

On the Chicago Mercantile Exchange, corn futures for March delivery settled at USD6.1362 a bushel by close of trade on Friday, the highest price since January 13.

The March contract added 1.93% over the week, the first weekly gain in three.

Corn futures rose 1.2% on Friday after the USDA said that corn exports inspected at U.S. ports in the week ended January 12 totaled 29.9 million bushels, above expectations for 25.6 million bushels and up from 11.7 million a week earlier.

Prices found further support amid speculation that rains forecast over the weekend in Brazil and Argentina were too late to aid corn crops which have already suffered irreversible damage.   

Meanwhile, soybeans for March delivery settled at USD11.8562 a bushel by close of trade Friday. On the week, prices gained 1.85%.

Soybean prices trimmed a weekly gain on Friday, slumping nearly 1% as rains across key soy-growing regions in Brazil were expected to provide much-needed moisture to stressed crops.  

U.S.-based industry group Country Futures said in a report Friday that, "The damage to corn in Argentina has been done, but the soybean crop in Brazil could recover substantially - possible full recovery. This is one reason we are seeing more pressure on soybeans today versus corn."

Traders have been focusing on weather conditions and crop prospects in Southern Hemisphere countries in recent weeks, as most Northern Hemisphere grain crops have been harvested by now.

South America is major grain exporter and competes with the U.S. for business on the global market. A smaller crop outlook there would likely mean greater demand for U.S. supplies.

Soy futures came under additional pressure as some market participants closed their positions and locked in profit ahead of China's week-long Lunar New Year holiday next week, which is typically a weak period for grain consumption.    

China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.

Soybeans remained supported following Thursday’s upbeat USDA data showing that U.S. soybean export sales totaled 36.4 million bushels in the previous week. The figure was significantly stronger than market expectations for sales of 23.9 million bushels and up from 16.0 million bushels a week earlier.

Elsewhere on the Chicago Board of Trade, wheat for March delivery climbed 1.18% over the week to settle at USD6.1062 a bushel on Friday. Earlier in the day, prices rose to USD6.1175 a bushel, the highest since January 17.

Wheat futures rose 0.75% on Friday after the USDA said that U.S. farmers sold 21.7 million bushels of wheat in the preceding week, beating expectations for sales of 14.7 million bushels.

Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.

In the week ahead, grain traders will continue to monitor South America's corn and soybean crop and how La Nina weather patterns will affect yields. U.S. winter-wheat crop conditions will also be in focus.