SINGAPORE: US grains rallied on Monday after a holiday weekend, with corn and wheat adding around 2 percent each, on continuing worries about weather in major growing areas and limited stockpiles.
The most active July corn contract rose to $7.62-1/2 a bushel by 0401 GMT, up from $7.44-1/2. Wheat rose 2 percent to $8.51-1/2 a bushel.
Investors, farmers and retailers face a drought that has been trimming prospects of hard red winter milling wheat in the US Plains. Wet weather has been hampering spring fieldwork and early spring wheat seeding in the US northern plains and Canada.
And wet weather in the US Midwest has delayed corn plantings at a time when every bushel is needed to meet surging demand from the ethanol, feeding and export sectors.
"In corn the concern is about planting schedules. If planting delays persist, it could push out nearby corn futures on CBOT to record highs of $8," said Ker Chung Yang, analyst at Phillip Futures.
"Corn inventories are declining and delays to planting will further stretch stockpiles. If that continues it could put corn on an upward path, and the price differential with wheat will narrow."
Corn traded at a rare premium to wheat in mid-April, its first since the mid-1990s, but has since reverted to normal, with wheat now trading about a dollar above corn.
Traders' attention is turning to the US Department of Agriculture (USDA) weekly crop progress report later on Monday.
Last Monday, the USDA said US corn plantings were 7 percent complete, below the 8 percent five-year average and sharply below last year's planting pace of 16 percent.
Soybean lagged the gains in other grains, rising 0.3 percent to $13.93-3/4 a bushel.
Last week, China confirmed it had cancelled six to eight South American soy cargoes and the deferral of about 20 shipments on losses at crushers, partly due to Beijing's expected release of a large volume of state soy reserves at lower prices to tame food inflation.
"Beijing is expected to release the last tranche of its soy reserves, which will depress prices," the Phillip Futures analyst said.
"But there are heavy rains in Brazil and Argentina, which will delay the harvest, and that could support the market."
China's measures to control inflation, especially for basic foods, rattled the market.
After a series of hikes in banks' reserve ratios and rising interest rates speculation has mounted Beijing could allow a one-off rise in the value of the Yuan to cut the cost of imported foods. But analysts and traders said such a move was unlikely.
"We have been discussing Yuan appreciation since the start of the year. Speculation of a Yuan hike will continue as long as food prices stay high," Yang said.
"After the rises in swerve ratios and interest rates recently, there is a chance they will raise the Yuan as a way to tame inflation, but I don't think we will see it in one go, more a gradual appreciation."
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