Corn, Wheat Futures Jump

CHICAGO—U.S. grain futures surged Friday as government export data showed foreign buyers took advantage of a recent dip in prices to secure supplies.

Futures soared after the U.S. Department of Agriculture reported weekly corn export sales of 1.65 million tons. The report was well above analysts' expectations and marked the fourth consecutive week export sales topped one million tons. Wheat export sales were strong as well with Egypt and Japan snapping up U.S. supplies.

The export data renewed concerns that world crop demand isn't pulling back even in the face of multiyear price highs and precariously low supplies.

Market prices are "supposed to be rationing demand, or at least making sure demand is not increasing," said Shawn McCambridge, senior grains analyst in Chicago for Prudential Bache, a brokerage firm.

Corn for May delivery briefly hit the 30-cent limit the Chicago Board of Trade places on one-day price rises before settling up 25.5 cents, or 3.7%, at $7.22 a bushel. Soft, red winter wheat futures soared 3.7% to $8.1125 a bushel and soybean futures gained 3.4% to close at $13.75 a bushel.

Prior to Friday's rally, wheat futures had been retreating from 2 1/2-year highs reached at the beginning of the month. Corn and soybean futures also had seen a recent pullback.

Yet foreign buyers saw the recent softness as a buying opportunity. Many are nervous about continuing tight supplies of high-quality wheat that can be milled into flour. The U.S., the world's top grain exporter, is seen as one of the last sources for so-called milling-grade wheat after a drought slashed output in Russia last summer and heavy rains hurt harvests in Australia and Canada.

At the same time, demand for grains used as animal feed isn't showing signs of slowing.Sanderson Farms Inc., the fourth-largest U.S. poultry producer by revenue, said this past week it wasn't cutting back production, in part to protect its chicken suppliers. Analysts say Sanderson and competitors Tyson Foods Inc. and Pilgrim's Pride Corp. are likely to maintain their output at current levels and instead wait for small producers to cut back.

A stabilization of the crude-oil market helped open the door for Friday's surge in crop futures. The rally in energy prices earlier in the week pressured agriculture commodities as traders worried high oil prices would slow global economic growth. Also, investors pulled back more broadly from commodities as political turmoil in Libya reduced their appetite for risk.

In other commodity markets:

COTTON: Exports of cotton from the U.S. from the start of the marketing year in August through Feb. 17 totaled 6.79 million bales, up from 4.50 million bales at the same point last year, according to the USDA. Cotton for March delivery surged 10.06 cents, or 5.5%, to $1.9134 a pound on ICE Futures U.S.

CRUDE OIL: Futures rose, ending near $98 a barrel as oil markets remain focused on the violent unrest in Libya. Oil gained 9.1% on the week marked by wild price swings due to uncertainty about how much of the North African country's oil output has been stopped. Light, sweet crude for April delivery settled up 60 cents, or 0.6%, at $97.88 a barrel on the New York Mercantile Exchange. ICE Brent April crude settled 0.7% higher at $112.14 a barrel.

(Source: http://online.wsj.com/article/SB10001424052748704692904576166843954920176.html)