US agricultural commodities, whose popularity among investors has waned, are proving increasingly popular among importers, Washington officials said, forecasting a spike ahead in wheat exports.
The US Department of Agriculture raised by $3.5bn to $134.5bn its forecast for US exports in fiscal 2012, which runs to the end of September, a figure second only to the $137.4bn achieved last year.
The upgrade was led by a $1.4bn boost to the forecast for exports of oilseeds and vegetable oils and meals, after weak harvests in South America, the main trade rival in the sector, "strengthened US unit prices and raised export prospects for soybeans and soymeal", the USDA said.
The forecast for of livestock products was raised by $400m to a record high of $29.6bn, reflecting improved hopes for pork and poultry sales, while the wheat export figure was raised by $500m to $8.5bn.
The uplift reflected ideas of "sharply increased volumes" - now expected at 29.1m tonnes, an upgrade of 3.9m tonnes – only partially offset by lower price expectations.
The impact was likely to be felt especially in the July-to-September period, when "strong shipments" were expected of an early, and improved, harvest.
"Competition from other exporters will be limited during the summer, giving the US increased market opportunities for the new crop," the USDA said.
Many analysts – although not the Russian Grain Union- have forecast a sharp fall in Russian wheat exports from their 2012 crop, with the European Union expected to see a drop in shipments too to a five year low.
Currently, US soft red winter wheat, the type traded in Chicago, "is the cheapest wheat in the world", according to broker US Commodities.
'Get me out'
The data were welcomed by Tom Vilsack, the US agriculture secretary, as evidence of a strong agriculture sector, which "we can expect… to remain a bright spot in our nation's economy in the months to come".
However, this picture contrasted with a continued sell-down by funds in their agricultural commodity holdings.
This week, as of Thursday's close, funds are estimated in Chicago to have sold a net 11,000 soybean lots, 12,000 wheat contracts and 27,000 corn contracts.
Open interest, the number of active contracts, has also "torpedoed lower", US Commodities said, adding that "liquidation continues".
At rival broker Allendale, Paul Georgy flagged "an attitude of 'get me out' and month-end margin clerks saying 'get out or get the margin in now'".
On a longer-term basis, funds hold a net long position in agricultural commodities of some 234,000 contracts, down from more than 400,000 in the spring and levels around 1m early last year, according to Rabobank.