SINGAPORE: Chicago wheat eased on Monday, giving up last session's gains on concerns over a looming US fiscal crisis, but the market is on track to end the year as one of the top performing commodities with support from tightening world supplies.
Soybeans rose on expectations of strong Chinese demand and shrinking global supplies following the worst US drought in more than 50 years, while corn was little changed.
The wheat market came under pressure as US lawmakers struggled to reach a last-minute deal that could protect the world's largest economy from a politically induced recession.
"Everybody is waiting for the outcome of US budget talks and there is some year-end positioning," said Serene Lim, a commodities analyst at Standard Chartered Bank in Singapore. "Soybeans are a little bit stronger today because of short covering and hopes of Chinese buying."
Soybeans and wheat have been the biggest gainers on the Thomson Reuters-Jefferies CRB index in 2012. Corn is on track for a more than 7 percent rise in 2012, a fourth straight year of gains.
US wheat futures have rallied as dry weather curbed supplies in Russia and Australia earlier this year. In more recent weeks, prices have been driven by lack of moisture threatening the hard red winter crop after the worst US drought in 56 years.
On Monday, Chicago Board Of Trade March wheat fell 0.6 percent to $7.74 a bushel by 0333 GMT and March corn rose quarter of a cent to $6.94-1/4 a bushel. March soybeans added 0.3 percent to $14.21-3/4 a bushel.
Investors are closely watching the US weather for price direction in the wheat market.
Cold temperatures have hit southern US Plains hard red winter wheat regions, raising the threat of crop damage from winterkill. The US crop quality had hit a record November low.
Despite the yearly gains, wheat futures slid to a six-month low last week on technical selling, end-of-year positioning and slow US exports.
The decline in prices has made US wheat more competitive in the world market and there are signs of buyers returning.
On Friday, government data showed the biggest weekly wheat export sales in nearly two years. US wheat exports totaled more than 1 million tonnes, the highest level since January 2011, and easily exceeded a range of trade estimates between 500,000 and 700,000 tonnes.
Egypt, the world's top wheat importer, was the biggest buyer with 405,000 tonnes of US supplies.
US export sales were disappointing for corn and soybeans. Net soybean sales amounted to 87,000 tonnes, below a range of trade expectations from 100,000 to 300,000 tonnes. That miss was tempered as the USDA separately reported a sale of 165,000 tonnes of US soybeans to China.
Analysts expect Chinese soybean demand to strengthen in the weeks ahead with processors reporting positive crush margins. This could further squeeze US stockpiles before the South American supplies hit the market by March.
Still, the prospects for the South American soybean crop look increasingly bright, with Argentina's soy crop in mostly good or excellent condition in the central Pampas farm belt, while welcome rains were forecast later for parts of central Brazil.
Net corn sales totaled 104,300 tonnes, down from a trade estimate range of 150,000 to 300,000 tonnes.
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