Wheat, soybeans firm with little respite for parched fields

CHICAGO: US grain and soy futures edged higher on Monday, with some wheat contracts rising more than 1 percent as weather forecasts showed little rain relief for dry wheat crops in the Plains or drought-affected grain belts in major exporter Argentina.

Global benchmark Chicago Board of Trade May wheat was up 5-1/2 cents, or 1.1 percent, to $5.05-1/2 per bushel as of 12:00 p.m. CDT (1800 GMT). K.C. May hard red winter wheat was up 8-3/4 cents, or 1.6 percent, to $5.42-1/2 per bushel.

"K.C. (wheat) is your leader and it's due to the ongoing dryness in the central Plains. I don't see anything in the forecast," said EFG Group analyst Tom Fritz.

Wheat prices held near the highest levels since July as fields in states such as top wheat grower Kansas needed rain.

"Dry weather will continue across the western Plains this week, which will maintain significant dryness concerns for hard red winter wheat," meteorologist Radiant Solutions said.

Gains for soybeans and corn were more modest, with a strong dollar and uncertainty over U.S.-China trade relations encouraging the oilseed market to consolidate after last week's rally.

CBOT May soybeans climbed 5-3/4 cents to $10.76-3/4 per bushel, near its multimonth high from Friday of $10.82-1/2. CBOT May corn was 1/4 cent higher at $3.92-3/4.

"Above all it is the drought in Argentina that is driving up prices. The Argentinian crop is set to be the worst in six years," Commerzbank analysts said in a note.

The deepening drought in the Pampas grain belt has led forecasters to cut estimates for the forthcoming Argentina soybean crop, prompting investors to raise their long position in Chicago futures.

Private analytics firm Informa Economics on Friday cut its forecast for Argentina's 2017/2018 soybean harvest by 7 million tonnes to 44 million tonnes.

But analysts have also set an expected drop in Argentine output against a bumper crop being harvested in Brazil and the risk that international trade tensions could disrupt massive Chinese imports of U.S. soybeans.

U.S. President Donald Trump announced last week that he would impose hefty tariffs on imported steel and aluminium to protect U.S. producers, risking retaliation from major trade partners such as China, Europe and neighbouring Canada.