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GRAINS-U.S. corn futures rise on China deal; soy, wheat steady

* Corn edges higher; gains capped by harvest progress
    * Grain trading volume light due to U.S. govt shutdown
    * More China buying expected after 420,000 T corn deal

 (Recasts, updates with U.S. trading, adds new analyst quote,
byline, pvs LONDON)
    By Mark Weinraub
    CHICAGO, Oct 9 (Reuters) - U.S. corn futures rose on
Wednesday, supported by firm export demand and the unwinding of
bearish bets as the feed grain traded near three-year lows,
traders said.
    Wheat and soybean futures were close to unchanged as the
market treaded water in the absence of fresh fundamental news.
The partial shutdown of the U.S. federal government has cut volume in the grains market as the U.S. Agriculture Department was not issuing its regular reports that traders use as a basis for trading. Although the market action in wheat was subdued, traders said the market retained its bullish tone due to continued signs of good demand from overseas buyers. Corn's strength stemmed from news that a private Chinese trading firm bought a total of 420,000 tonnes of corn last week from the United States for delivery next year in order to take advantage of cheap U.S. prices. [ID:ID:nL4N0HZ0VD] The Chinese foray into the export market raised the prospect of more purchases. "I do not think it is a one and done," said Sterling Smith, futures specialist with Citi in Chicago. "I think we will see them back in the market." At 10:25 a.m. CDT (1525 GMT), Chicago Board of Trade corn for December delivery was up 1-3/4 cents at $4.43-1/2 a bushel. The December corn contract peaked at $4.47 early in the trading day but struggled to hold support above its 10-day moving average of $4.45-3/8.
But gains were kept in check by forecasts for dry weather in key production areas of the United States. "This is going to be weighed against the very good weather over the next three or four days which should result in very good harvest progress," Smith said. "Those combines will be rolling full speed. Guys get a window of good weather, they really are going to be hammering those good fields." CBOT December soft red winter wheat was down 1/2 cent at $6.93 a bushel. Algeria's state grains agency OAIC bought 500,000 tonnes of optional-origin milling wheat in a tender, European traders said. Most of the wheat will likely be sourced from France. CBOT November soybeans dropped 2-1/2 cents to $12.86-1/4 a bushel. "Prices are down as the harvest pace picks up," said Vanessa Tan, investment analyst at Phillip Futures in Singapore. "Right now it is warm and dry and that will allow the farmers to accelerate their harvest." Expectations for a record large crop in Brazil also weighed on the soybean market. Brazil's government crop supply agency Conab forecast harvest for the 2013/14 crop year between 87.6 million and 89.7 million tonnes. Prices at 10:25 a.m. CDT (1525 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 443.50 1.75 0.4% -36.5% CBOT soy 1286.25 -2.50 -0.2% -9.3%
CBOT meal 424.90 -3.80 -0.9% 1.0% CBOT soyoil 40.27 0.07 0.2% -18.1% CBOT wheat 693.00 -0.50 -0.1% -10.9% CBOT rice 1486.50 11.00 0.8% 0.0% EU wheat 198.00 1.75 0.9% -20.9% US crude 101.77 -1.72 -1.7% 10.8% Dow Jones 14,729 -48 -0.3% 12.4% Gold 1301.86 -16.44 -1.2% -22.2% Euro/dollar 1.3514 -0.0057 -0.4% 2.4% Dollar Index 80.3900 0.3300 0.4% 0.8% Baltic Freight 2125 -21 -1.0% 204.0% In U.S. cents, benchmark contracts, except EU wheat (euros) and soymeal (dollars). CBOT wheat, corn and soybeans per bushel, rice per hundredweight, soymeal per ton and soyoil per lb. (Additional reporting by Colin Packham in Sydney; Editing by Marguerita Choy)

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