SYDNEY/MILAN: Chicago soy futures rose to their highest in more than five months on Friday, on track for a fourth straight week of gains as the market was supported by strong US export sales led by demand from China.
Wheat rose 0.7 percent, recovering from the lowest level since Feb. 27 in the previous session, and corn was also higher ahead of the US Department of Agriculture's demand and supply report to be released at 1330 GMT.
"The focus is on the USDA report, and according to most forecasters, we are likely to see a contraction in oilseed numbers," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.
"On grains, perhaps we will see slight tightening in the corn balance sheet because of corn crop losses in South America."
Analysts in a Reuters poll expect the USDA's March supply/demand and crop production reports to show declines in US and global grain and soy ending stocks and declining production of corn and soy in South America.
Chicago Board of Trade May delivery soy gained 1.14 percent to $13.53-3/4 a bushel by 1201 GMT after rising to $13.55-1/2 earlier in the session - its highest since Sept. 21 last year.
CBOT actively traded corn for May delivery rose 0.59 percent to $6.39-1/4 a bushel, while May wheat added 0.67 percent to $6.39 a bushel.
For the week, soybeans are up more than 1 percent so far, while corn has lost about 2.5 percent after rising 1.7 percent last week. Wheat is down about 5 percent this week after gaining by a similar amount last week.
European milling futures rose in step with the US markets as operators keenly awaited the USDA data release. Euronext benchmark May milling wheat was up 3.25 euros or 1.60 percent at 207.00 euros a tonne.
STRONG US SOYBEAN EXPORTS
US soybean export sales soared last week to the second highest point in more than a year, driven by strong Chinese demand for spring and summer shipments amid concerns about South American crop shortfalls and shipping delays.
Exporters sold more than 1 million tonnes last week for shipment before the next US harvest, the largest old-crop sales this late in the marketing year in at least two decades, USDA data showed.
The market has been underpinned by a drought that has curbed corn and soybean supplies in South America.
The Buenos Aires Grains Exchange cut its estimate for Argentina's 2011/12 corn harvest to 20.8 million tonnes from 21.3 million previously due to the drought.
Brazil's government again pared back its forecast for soy production and exports on Thursday, after registering more losses from the drought, which has hurt yields in the southern grain belt over the past several months.
South American supplies may get squeezed further as crews needed to guide ships through the ports of Argentina stay off the job until more staff are assigned to work busy docking shifts.
The week-old walkout by the dockers has bogged down shipments from the world's biggest supplier of soyoil. Argentina is also a major global provider of corn and soybeans.
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