US corn gains for 2nd day, soy rebounds on Greece news

SINGAPORE: US corn futures rose more than 1 percent on Friday, extending previous session's gains, while soybeans bounced back amid a broad-based strength in commodities following Greece's deal with international lenders for a new austerity plan.

Spot-month wheat fell around half a percent and forward contracts were little changed as the market remained under pressure from improved weather conditions in Europe, raising hopes of ample supplies.

The euro advanced from early lows and stocks inched higher on Friday as Greece's deal offered investors a rare piece of good news in a week filled with gloomy economic data.

"It's a rebound after sharp drop as people are buying on the dip with external factors such as the Greece deal supporting the grain markets," said Ker Chung Yang, analyst at Phillip Futures in Singapore.

"Higher crude oil is supporting both soybeans and corn. There is good demand at these levels for importers to lock in supplies."

Still, the front-month wheat is down more than 17 percent so far this month after being hammered for a fourth week in a row by a mix of bearish economic indicators and improved crop weather. Corn has lost 8 percent in June, while soybeans have given up almost 4 percent.

Chicago Board of Trade July corn rose 1.2 percent to $6.88-3/4 a bushel by 0249 GMT and July wheat slid 0.4 percent to $6.46-1/2 a bushel. CBOT soybeans for July delivery rose 0.7 percent to $13.26-3/4 a bushel.

On Thursday, a surge in the dollar led corn futures to their biggest two-day drop in 2-1/2 years before recovering towards the market close, while spot wheat futures fell to a one-year low.

Two weeks ago, US corn prices had soared nearly 150 percent from a year ago to a record high $7.99-3/4.

Analysts said a steep decline in corn prices is likely to prompt feed millers to aggressively make purchases, given the tight global supplies.

"There are tight old-crop supplies and the new-crop is not made yet," said Chung Yang. "We are still waiting to see crop conditions report on Monday as the weather has been very erratic."

The northern US Corn Belt will stay wet keeping crop development slow and add more water to flooded rivers while the southern belt will turn hotter and drier, boosting plant growth, a forecaster said.

Brent crude rebounded by more than $1 from a four-month low on Friday as traders and investors attempted to gauge the actual impact a release of emergency oil stockpiles coordinated by the International Energy Agency will have on supplies.

The dollar index, which measures the strength of the greenback against a basket of currencies, fell 0.2 percent.

A weak dollar makes US commodities more attractive for importers, while crude oil prices often guide movement in the prices of grains, which are increasingly being used to make renewable fuels.

Copyright Reuters, 2011