BEIJING/MILAN: US wheat and corn prices rose on Monday, helped by renewed concerns about tightening grain supplies and a surge in oil prices, but European wheat fell as the euro strengthened against the dollar.
Chicago Board of Trade May wheat was 0.9 percent higher at $7.31-1/4 a bushel by 1249 GMT paring earlier gains. CBOT May corn gained 1.28 percent to $6.95-1/4 a bushel.
"The trade in grains is pretty choppy. We had some strong rallies late last week after a big sell-off," said Victor Thianpiriya, agricultural commodity analyst at ANZ in Melbourne.
He noted corn markets were particularly sensitive after news US exporters sold over 100,000 tonnes of corn last week.
"China was a buyer of corn last week. The USDA reported a sale of 116,000 tonne of corn to unknown destination - that probably means China. More news like that will be bullish."
A six-day price slide last week, the longest slump in four months, attracted buyers and lifted sales above 1 million tonnes for the seventh time in nine weeks.
Market attention has shifted from dramatic events in earthquake-hit Japan which triggered a grain sell-off last week to tightening supplies after Russia trimmed this year's grain crop view and German farmers said they expected a disappointing wheat crop this year.
"The fact that prices have gained upside impetus again is not only a technical reaction to the sharp price losses before; the supply situation also appears to have tightened somewhat," Commerzbank said in a note on Monday.
The market is also eyeing the western US Plains hard red wheat belt for weather and moisture conditions for signs of lower yields.
Also helping underpin grains prices was a near two percent jump in oil prices on Monday after Western forces launched attacks on Libyan air defences over the weekend.
European milling wheat futures fell on Monday as a four-month high for the euro and technical resistance cooled buying interest after a sharp rebound at late last week.
Euronext prices rose in opening trade to extend spectacular gains from Thursday and Friday, before turning lower as the market consolidated in much less volatile trade than last week.
May milling wheat was down 1.5 euros or 0.65 percent at 230.25 euros a tonne by 1249 GMT as it hovered around the technical threshold of 230 euros.
The contract had recovered from a low of 200.25 euros last Tuesday to close at 231.75 euros on Friday, as concerns eased about the impact of an earthquake and nuclear crisis in Japan and attention turned to fundamentals.
But operators cautioned that the market was yet to establish a clear upward trend and that the outlook remained liable to be affected by violence in the Middle East, including military strikes against Libya, and nuclear risks in Japan.
"We're seeing a bit of pause after the impressive rebound of last week," a French dealer said. "For the moment we've been talking about a technical rebound, not a real rally."
SOYBEANS ON THE RISE
May soybeans rose 0.42 percent to $13.68-1/4 a bushel and the market could be due for a technical reversal according to Reuters analyst Wang Tao, while unfavourable weather in Brazil may also support prices, in spite of disappointing US sales last week.
He said soybeans may rally to $14.20 per bushel as a long-term bull trend has resumed.
Support was pegged at $13.40, a fall below which could be limited to stronger support at $13.28, the 50 percent Fibonacci retracement on the rise from $12.70 to $13.85-3/4.
On the crop front, ANZ's Thianpiriya noted crop conditions in Argentina had improved, with crop estimates revised to 48 million tonnes from 47 million tonnes.
"But in Brazil it's worse. They have been getting a lot of rain but in the past month or two they've had too much and that has knocked two to three million tonnes off the crop estimate."
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