SINGAPORE: US corn rose more than 1 percent on Wednesday, while soybeans recovered from a near one-year low as the markets took a breather on hopes that European leaders were stepping up efforts to contain the region's debt woes.
Wheat was up 1 percent, rising from last session's three-month low amid broad strength in global markets but the grain is likely to come under pressure from forecasts of rains in the drought-hit US Plains.
The corn market drew additional support after the US Grains Council said it expected China to import 5 million to 10 million tonnes of corn in the 2011/12 season, compared with the USDA's forecast of just 2 million.
"Once the financial markets settle, the commodity markets will also settle, but I think over the next few months it's going to be very volatile," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore.
"We still remain very bullish on corn as China is going to be looking to buy corn at these values."
Chicago Board of Trade December corn rose 1.06 percent to $5.94 a bushel by 0323 GMT, while November soybeans rose 0.5 percent to $11.66-1/4 a bushel. December wheat gained 1.03 percent to $6.10-1/4 a bushel.
The corn and soybean harvests should advance in the Midwest this week under clear skies that weighed on US cash basis values for soybeans.
Soybean futures have dropped 20 percent since the harvest started in August and on Tuesday hit their lowest in about a year.
Corn has fallen nearly 30 percent since setting a record high of nearly $8 per bushel in June and the market is recovering from its lowest level in 9-1/2-months hit on Monday.
Asian stocks rebounded from steep losses over the past several sessions on Wednesday, after tentative signs European leaders are stepping up efforts to stop the region's sovereign debt woes from sparking a full-blown banking crisis.
European finance ministers agreed on Tuesday to safeguard their banks as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead.
And remarks by Fed Chairman Ben Bernanke that the US central bank was prepared to take further steps to help the world's top economy, which he said was "close to faltering", gave investors a rationale to pick up battered commodities such as copper, oil and grains.
China may need to import five times as much corn as the US government expects over the next year, an industry group said on Tuesday, setting the stage for another potentially explosive year for prices.
The US Grains Council, which just completed a crop tour in China, said the record harvest will not be enough to meet demand in the world's most populous nation, where expanding consumption of meat is undermining decades of self-sufficiency and helped fuel this year's record surge in prices.
The wheat market could face pressure from rain forecast in the US Plains that could improve 2012 winter crop prospects.
Drought-hit areas of the southern US Plains are expected to get much-needed moisture later this week that should help some of the new winter wheat crop to germinate.
Wheat seeding has been slowed by the drought but farmers are likely to go ahead and plant the crop in hopes of rainfall this fall that would help seeds grow. The USDA said 16 percent of the crop had emerged, including 13 percent in Kansas, the top winter wheat state.
Copyright Reuters, 2011
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