SINGAPORE: Chicago corn and soybean futures rose on Wednesday, supported by deteriorating condition of the US crops which is threatening to further tighten global supplies.
Wheat rose 0.6 percent after sliding nearly 2 percent in the last session when the market was weighed down by risk aversion tied to Europe's debt crisis and worries about the health of the US economy.
After the Chicago Board of Trade closed on Tuesday, a US government report said that 52 percent of the US corn crop was rated in good to excellent condition, down from 54 percent in the previous week and 69 percent a year ago.
Soybean conditions also declined, with 56 percent of the crop rated good to excellent, down from 57 percent a week earlier and 64 percent a year ago, according to the US Department of Agriculture in its weekly crop progress report.
"I think the crop progress report is supporting prices as it has shown that the condition of US crops is worsening," said Ker Chung Yang, an analyst at Phillip Futures in Singapore.
"We are also seeing some bargain hunting after a sharp drop yesterday, importers will take such an opportunity to lock supplies."
Chicago Board of Trade benchmark December wheat rose 0.6 percent to $7.64-3/4 a bushel by 0317 GMT and December corn gained 0.3 percent to $7.57-3/4 a bushel. November soy gained 0.4 percent to $14.28-3/4 a bushel.
The agricultural markets have been looking at wider financial markets for direction.
Asian stocks rebounded on Wednesday as investors hunted for bargains after the latest market slide, while the euro edged up against the dollar as traders covered some bets against the common currency following a sharp overnight fall.
Still, gains in soybean market were capped by a bearish private crop estimate from analysts Informa Economics and as welcome weekend rains eased concerns about a further decline in the US crop.
On Tuesday, Informa pegged the US soybean yield at 41.5 bushels per acre. That was down from its previous estimate of 42.5 but above the US Department of Agriculture's latest figure of 41.4 bushels per acre, and above most other recent private estimates.
The US Agriculture Department will update its forecast for both crops in a monthly report on September 12.
There was market talk in Chicago on Tuesday that China, the world's top soybean buyer, was booking Brazilian soybeans for shipment in November -- in the thick of the US soy harvest -- a bearish factor for soybeans.
Hamburg-based newsletter Oil World said a smaller US soy crop would likely slow US exports in the third quarter of 2011 with more business being won by South American suppliers.
The market is also awaiting result of a tender issued by Egypt's main wheat buying agency, the General Authority for Supply Commodities (GASC). It set a tender on Tuesday to buy an unspecified amount of wheat from global suppliers for Nov. 11-20 shipment.
Commodity funds were net sellers of an estimated 7,000 contracts of Chicago Board of Trade corn futures on Tuesday, trade sources said. They were net sellers of 3,000 wheat contracts and sold 7,000 soybean contracts.
Copyright Reuters, 2011
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