SYDNEY: US wheat futures posted gains of around 2 percent in early Asian trade on Monday, adding to gains on Friday on continued concerns about the US winter wheat crop and with the government's monthly supply and demand report due for release on Wednesday.
Bellwether Chicago Board of Trade wheat for July delivery gained 1.94 percent to $7.74-1/4 per bushel, underpinned by dry weather affecting crops in the US Southern Plains as well as inclement weather in Germany, France, China and Canada also pointing to possible tighter supplies.
As well as the May supply-demand report on Wednesday, traders are also waiting for a weekly crop progress report from the US Department of Agriculture (USDA) due later on Monday.
July corn advanced 0.84 percent to $6.92 per bushel, partially recovering from a 3 percent fall on Friday as oil strengthened more than 1 percent early on Monday. Friday's fall came after a surge in the dollar and downturn in crude's price triggered long liquidation across the broad commodities complex.
July soybeans rose 0.32 percent to $13.30-1/4 per bushel early on Monday adding to gains on Friday as bargain-hunters stepped into the market as the contract continued to fall from two-year highs struck in February on slower US exports and large South American harvests.
FUNDAMENTALS
* Most analysts continue to have a positive outlook of grain prices over the long term as US farmers struggle to plant their corn and on concerns over wheat crops from China to Germany to Canada, but they agree on short-term turbulence.
* As the dollar showed signs of a bounce back from the doldrums last week hedge funds and other financial investors had been reducing their exposure in grain markets before a significant sell-off of Thursday and Friday.
* The CFTC Commitment of Traders report on Friday said speculators slashed their net long position in Chicago Board of Trade corn by 36,901 contracts in the week that ended May 3, and they cut their longs in soy by 8,832 contracts.
* Spot corn futures have eased in the past weeks after racing to a record high amid a slowdown in exports and in the usage of corn to make ethanol.
* The USDA has forecast US old-crop corn stocks would be at their tightest since the 1930s this summer.
* The USDA will issue its May supply-demand report on Wednesday, which will offer the department's first estimate of the winter wheat crop in the United States -- which accounts for nearly half of all US wheat exports.
* The wheat market has underlying support from drought trimming US winter wheat crop prospects and inclement weather in Germany, France, China and Canada also pointing to possible tighter supplies, particularly of higher protein wheat.
* The USDA will also give its first estimate of ending stocks for this year's corn and soybean crops. Additionally, it will update global crop production numbers, including corn and soy production in Brazil and Argentina.
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