HAMBURG/SINGAPORE: US wheat and corn steadied on Wednesday on bargain-hunting after a sharp sell-off on Tuesday in cautious trade ahead of a key upcoming US government crop report, while soybeans remained at five-month highs.Soybeans continued to be supported by fears of drought damage to South American crops and expectations a US Department of Agriculture (USDA) report on Friday will predict smaller crops in Brazil and Argentina, traders said.
"We are seeing some bargain-buying interest with dips being bought in grains," an analyst at one European bank said. "There is some stabilisation ahead of the USDA report."
A firmer trend in equities and crude oil on Wednesday also supported.
Chicago Board of Trade May wheat was hardly changed, down a marginal 0.1 percent at $6.56-1/4 a bushel at 1150 GMT. Wheat had fallen over 2 percent in the previous session on concerns about the global economy.
Chicago May soybeans rose 0.1 percent to $13.37-1/2 per bushel, holding above the five-month high of $13.36-1/2 touched on Monday.
Chicago May corn was up 0.04 percent at $6.54-1/4 per bushel, after falling 1 percent on Tuesday.
The market is expecting the USDA to lift its forecast for US soybean export demand as smaller South American crops transfer demand to the United States.
Traders and analysts also predict a reduction in drought-hit Brazil's soybean output. Hamburg-based oilseeds analyst Oil World has cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes to 68 million tonnes, a day after two industry groups cut their own forecasts.
"By comparison to other grains, beans' balance sheet is possibly tighter, but you can argue that US soybean prices will have to do some more work (upward price movement) to maintain acreage or to encourage additional planting," said Brett Cooper, a senior manager of markets at FCStone Australia.
Fundamentally, the wheat market is well supplied and there is nothing to fear at the moment unless any production risk emerges over the course of next month for the northern hemisphere crop, said Cooper.
In Australia, the world's fourth-largest wheat exporter, farmers will reduce wheat plantings in 2012/13 in response to lower global prices, although the country is still expected to produce an above average crop after two straight years of record output.
Analysts believe the USDA will trim its estimate of 2011/12 US and world wheat stocks in its Friday report to 212.6 million tonnes, from its February forecast of 213.1 million tonnes.
"Weather conditions in North America still need to improve, with dryness persisting in the southwest US Great Plains, the US northern plains and the Canadian Prairies," Commonwealth Bank of Australia commodity strategist Luke Mathews said in a note.
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