GRAINS-U.S. wheat touches 2-week high as export prospects brighten

* Good exports, s. hemisphere crop worries underpin wheat

* Funds adjust positions in corn, wheat ahead of holiday

* Soybeans ease after Friday jump (Updates prices, adds analyst comment, previous dateline PARIS/SYDNEY)

By Rod Nickel

WINNIPEG, Manitoba, Nov 25 (Reuters) – Chicago wheat futures climbed on Monday to a two-week high as worries about harvests in Argentina and Australia bolstered potential demand for U.S. wheat.

Chicago Board of Trade corn also rose, as funds covered part of their short positions in corn and wheat ahead of Thursday’s Thanksgiving holiday. Soybeans dipped on profit-taking and pressure from weaker crude oil prices.

“Funds have (previously) been heavy sellers in the wheat pit and they’re sitting relatively short on corn, so we’re seeing a bit of buying, because CBOT will be closed on Thursday, short day on Friday,” said Karl Setzer, market analyst at MaxYield Co-op in West Bend, Iowa.

“We’re just seeing fund positioning more than anything,” he said, adding that trading volumes were thin. Improving competitiveness of U.S. wheat, as suggested by strong weekly export data last week, and worries about weather damage in key exporters Argentina and Australia have helped stir Chicago futures.

“The gains are being driven by the rising competitiveness of U.S. wheat,” said Vanessa Tan, investment analyst at Phillip Futures Singapore. “Previously, you have seen tenders bypassing U.S. wheat, but now with Australia for one seeing unfavorable weather conditions, this could shift demand to the U.S.”

Unseasonal rains in Western Australia and frost on the country’s east coast have hit wheat crops in the world’s No. 2 exporter of the grain, dragging down quality and reducing harvests.

Elsewhere, the Rosario Grains Exchange last week forecast Argentina’s wheat crop at 9.1 million tonnes in its first estimate of the season, well below the 11-million-tonne view of the U.S.

Department of Agriculture. A limited surplus in Argentina could open the way for more U.S. exports to Brazil, which has already been a major draw on U.S. wheat so far this season.

Chicago Board of Trade December wheat rose 0.7 percent, or 4-3/4 cents, to $6.54-1/4 a bushel, climbing for a third straight session as of at 9:20 a.m. CST (1520 GMT).

It earlier reached $6.55, a front-month level last reached on Nov. 11. A stronger dollar curbed Chicago prices by making them more expensive internationally.

Crude oil was pressured by reaction to a weekend diplomatic deal over Iran’s nuclear program.

Iran has been a big importer of wheat in the past year and there was no immediate direct impact from the nuclear deal on grain prices. But Iranian private buyers are inquiring about buying around 300,000 tonnes or more of milling wheat, European traders said.

CBOT January soybeans eased 0.3 percent, or 4-1/2 cents, to $13.15 a bushel, having closed up 2.2 percent on Friday in a demand-fuelled rally.

Exporters sold 120,000 tonnes of U.S. soybeans to unknown destinations for 2014/15 delivery, the U.S. Agriculture Department said on Monday.

The USDA on Friday confirmed sales of 115,000 tonnes of U.S. soybeans to China, after reporting on Thursday weekly soybean sales well above expectations at nearly 1.4 million tonnes. But a large U.S. soybean harvest that is winding down, plus prospects for big South American crops were acting as a brake on prices.

“Favourable weather forecasts for Brazil and Argentina are shifting the focus back to the forthcoming supply from South America … and are thus causing prices to fall this morning,” Commerzbank analysts said in a note.

CBOT December corn added 0.5 percent, or 2-1/4 cents, at $4.24-1/2 a bushel, picking up support from a strong U.S. cash market, Setzer said. 

Prices at 9:20 a.m. CST (1520 GMT)                                          
                       LAST      NET    PCT     YTD
                                 CHG    CHG     CHG
CBOT corn            424.50     2.25   0.5%  -39.2%
CBOT soy            1315.00    -4.50  -0.3%   -7.3%
CBOT meal            426.90    -0.90  -0.2%    1.5%
CBOT soyoil           41.05    -0.11  -0.3%  -16.5%
CBOT wheat           654.25     4.75   0.7%  -15.9%
CBOT rice           1574.50     3.00   0.2%    6.0%
EU wheat             207.75     1.25   0.6%  -17.0%
US crude             93.84       -1  -1.1%    2.2%
Dow Jones           16,087       22   0.1%   22.8%
Gold               1240.80    -2.19  -0.2%  -25.9%
Euro/dollar         1.3492  -0.0066  -0.5%    2.3%
Dollar Index       80.9990   0.2910   0.4%    1.5%   

(Additional reporting by Gus Trompiz in Paris and Colin 
Packham in Sydney; Editing by Marguerita Choy)

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