Grain futures - Weekly outlook: January 14 - 18

Investing.com - U.S. grain futures ended Friday’s session mixed, with wheat and corn prices both surging nearly 2% following the release of the U.S. Department of Agriculture’s closely-watched monthly report on U.S. and global grain supplies.

On the Chicago Mercantile Exchange, wheat for March delivery jumped 1.85% Friday to settle the week at USD7.5788 a bushel. Earlier in the day, prices rose to a session high of USD7.7175 a bushel, the strongest level since January 2.

On the week, the March wheat contract rose 1.2%, the first weekly gain in six weeks.

Wheat future prices rallied after the USDA cut its forecasts for U.S. wheat reserves at the end of the crop's current marketing year on May 31 to a four-year low of 716 million bushels, 5% lower than the agency’s December estimate.

Government data also showed that U.S. farmers planted 41.82 million acres of wheat, 2% below analysts’ expectations.

Wheat prices fell to a six-month low of USD7.3638 a bushel earlier Friday, as investors readjusted positions ahead of the USDA report amid speculation the agency would not cut supplies as much as market expectations.

Elsewhere on the Chicago Board of Trade, corn futures for March delivery climbed 1.5% Friday to settle the week at USD7.0925 a bushel. Earlier in the day, corn futures rose to USD7.2338 a bushel, the highest level since December 18.

The March corn contract rallied 4.1% on the week, the first weekly advance in six weeks and the biggest weekly gain since July.

Corn prices rallied as much as 3.7% on Friday after the USDA pegged the U.S. corn stockpile on December 1 at 8.03 billion bushels, down 17% from a year earlier and the smallest for that date since 2003.

Inventories at the end of the crop's marketing year on August 31 were projected to total 602 million bushels, a 17-year low

The U.S. corn harvest will total 10.78 billion bushels, down from 12.36 billion collected in 2011 and the lowest in six years.

Corn prices have been under heavy selling pressure in recent weeks, with prices falling to a six-month low last week, as worries over slowing overseas demand for supplies from the U.S. have weighed on sentiment.

Meanwhile, soybeans for March delivery shed 0.25% Friday to settle at USD13.7588 a bushel by close of trade. The March contract fell to a low of USD13.5262 a bushel earlier in the day, the cheapest level since June 5.

Despite Friday’s losses, soy futures ended the week with a gain of 0.75%, the first weekly advance in four.

The USDA estimated that U.S. farmers will harvest 3.015 billion bushels of soybeans in the current marketing year, up 1.5% from a previous estimate, but still the smallest in five years.

The government also forecast ending domestic soybean stocks on August 31 at 135 million bushels, 3.8% higher than the agency’s projection in December.

Expectations for bumper crops in major South American soy growers also added to the selling pressure. The USDA said Brazil will harvest a record 82.5 million tonnes of soybeans this spring.

World production will total 269.41 million tons in the current marketing year, more than the 267.72 million forecast in December. In the previous season, global output totaled 238.73 million tons.

In the week ahead, corn and soybean traders will continue to pay close attention to weather forecasts for grain-growing regions in Brazil and Argentina, while wheat traders will monitor temperatures in the Great Plains-region.

Market players will also focus on the USDA’s weekly crop progress report on Monday as well as Thursday’s weekly exports data.

Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.