U.S. grains rise again in thin pre-holiday trade

U.S. grains edged higher on Monday in thin trading before the Christmas holiday, notching their second straight gains in a modest recovery from the previous week’s sharp losses.

Chicago soybeans were underpinned by bargain hunting after prices slid to a one-month low last week, and by technical buying.

Corn futures gained on expectations of a rebound in demand for U.S. supplies, after dropping last week to their lowest level since early July, while wheat was firm on concerns that dry weather was hurting the U.S. winter crop.

Outside markets kept a lid on gains, said Rich Nelson, chief strategist with Allendale Inc. Stock markets traded slightly lower due to worries about the U.S. fiscal cliff budget crisis, while the U.S. dollar picked up strength.

Chicago January soybeans rose nine cents, or 0.6 per cent, to $14.39-3/4 a bushel (all figures US$). Last week, the contract closed down more than four per cent, its steepest weekly decline since mid-November.

The soybean market has been weighed down by signs of weakening demand from China, the world’s top importer, which canceled U.S. cargoes, hoping for cheaper supplies from South America early next year.

"It is a bit of a rebound from oversold levels after the market got spooked by news of Chinese buyers’ cancelling cargoes," said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore.

The weather in Brazil’s soybean areas has generally been favourable for the crop, and the harvest is expected to kick off by early January, according to agronomists.

Corn for March delivery gained 2-1/4 cents, or 0.3 per cent, to $7.04-1/4 a bushel, on bargain-buying.

The front-month corn contract last week dropped to its lowest since early July on softer demand for U.S. cargoes. A forecast for the biggest U.S. corn acreage since 1936 from closely watched private analytics firm Informa Economics also dragged down prices.

"The U.S. hasn’t been competitive in the corn export market, but around $7 a bushel it starts getting competitive again," Thianpiriya said.

March wheat added 1-3/4 cents, or 0.2 per cent, to $7.93-3/4 a bushel, on short-covering.

The wheat market was underpinned by concerns that drought would curb the U.S. winter wheat crop. The first major snowstorm of winter did little to ease the drought, which is the worst in more than 50 years in the crop-growing U.S. central Plains and Midwest.

Traders were also digesting news Friday from the U.S. Commodity Futures Trading Commission that large speculators had increased their net short position in CBOT wheat to the largest level since May. Such a large short position looked bullish for wheat if weather conditions worsen and prompt investors to cover some shorts, Zuzolo said.

Argentina’s Agriculture Ministry has cut its estimate for 2012-13 wheat production by five per cent to 10.5 million tonnes, which is still higher than leading private forecasts but reflects damage caused by wet weather.

Trading in Chicago grains ended two hours earlier than usual on Christmas Eve.

Traders said they would be watching for results later in the day of voting by nearly 3,000 union dock workers at four Pacific Northwest ports on a contract offer by grain shippers. A possible labor clash at the second-biggest grain-exporting region in the U.S. has fuelled speculation that shippers might lock out union members and keep the grain terminals operating with replacement workers.

— Rod Nickel writes for Reuters from Winnipeg. Additional reporting for Reuters by Valerie Parent in Paris and Naveen Thukral in Singapore.

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