SINGAPORE: US soybeans rose half a percent on Monday, building on last four weeks of gains and trading near a six week high as dry weather in Argentina threatened to curb crop yields there.
Wheat edged higher as Egypt bought US soft red winter wheat over the weekend, indicating buyers were turning to US grains with supplies diminishing in rival exporters.
Scattered showers in Argentina in recent weeks have brought some relief to thirsty 2012/13 corn and soybean crops, but many areas are still suffering parched conditions, the agriculture ministry said.
"Strong demand and ongoing uncertainty regarding South American seasonal conditions remain supportive for oilseed prices," Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia, said in a note to clients.
Argentina is the world's No. 3 soybean and corn exporter after the United States and Brazil. Consumer nations are hoping it can provide ample supplies of both crops to bolster world food stocks.
The weather in February will be critical for the nation's soybean crop.
Informa Economics raised its estimates for Brazil's soybean and corn crops but lowered its forecasts for production of both crops in Argentina.
The firm raised its estimate for Brazil's soybean crop to 84.0 million tonnes, which the firm said was up 1.1 million from its previous forecast. Its corn production forecast was raised to 70.3 million tonnes from 66.2 million last month.
For Argentina, Informa cut its corn production estimate to 25 million tonnes from 27 million previously, and reduced its soybean estimate to 54.5 million tonnes from 58.4 million.
Chicago Board of Trade March soybeans rose 0.5 percent to $14.81 a bushel by 0218 GMT, not far from Friday's six-month high of $14.86-1/2 a bushel.
Speculators raised their long position in corn and soybean futures for the third week in a row, betting that prices will rise amid tight US supplies, regulatory data released on Friday showed.
The noncommercial traders, a category that includes hedge funds, also tightened their net short position on CBOT wheat, bringing it to a seven-week low.
The wheat market, which slid for last two weeks, was underpinned by Egypt's purchase of US wheat although gains were capped by the low price at which the grain was sold.
March wheat gained 0.1 percent to $7.65-3/4 a bushel and March corn added 0.1 percent to $7.37 a bushel.
Egypt, the world's biggest importer of wheat, bought 60,000 tonnes of US Soft Red Winter wheat from Venus at $306.80/tonne with freight costs of $25.64.
"Typically, such news would be bullish for markets, but this result is little blurry because of the weak prices which, at around $332 a tonne, were $10-$15 a tonne below other offers and at least $30 a tonne under French offers," Mathews said.
There was additional support for the wheat market with expectations Russia, the world's third largest exporter, is planning to cut duty to make imports attractive and ease tight domestic supplies.
Russia is considering a proposal to suspend a 5 percent grain import duty until Aug. 1, 2013, the government said in a statement on Friday, a move which would make grain imports from the European Union more attractive.
The duty removal could cut costs for EU grain imports to Russia, which is now importing wheat mainly from neighbouring and tariff-free Kazakhstan.