Corn, wheat bounce from six-month lows on bargain buying

CHICAGO: US grain futures edged higher on Monday as a wave of bargain buying hit the market with prices hovering near six-month lows, traders said.

Soybeans were choppy, fluctuating between positive and negative territory. Traders said gains were capped by the impending harvest in South American countries such as Argentina and Brazil. But traders said the market is ripe for technical buying after prices have fallen for three weeks in a row.

"If nothing else, the market is oversold," said Frank Cholly, senior commodities broker at RJO Futures. "Fundamentally, nothing has really changed."

All three commodities closed last week in technically oversold territory according to the nine-day relative strength index.

At 10:20 a.m. CST (1620 GMT) , Chicago Board of Trade March soft red winter wheat futures were up 4-3/4 cents at $7.52 a bushel.

Short-covering provided additional support to wheat prices. A Commodity Futures Trading Commission report issued on Friday afternoon showed that speculators have built up their largest bearish bet on CBOT wheat since mid-May.

 CBOT March corn was up 1-1/2 cents at $6.81-3/4 a bushel and CBOT March soybeans were 1 cent higher at $13.68-1/4 a bushel following four straight days of declines.

"We have seen a fair bit of liquidation in beans and now there is some end-user demand which is resulting in a bounce," said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore.

Investors in the soybean market are watching moves by buyers in China, the world's top importer, which has canceled US cargoes in the last few weeks on an improved supply outlook in rival exporter Brazil.

Traders said grain investors were staking out positions ahead of key US Agriculture Department supply and demand report on Friday, which will provide the final update on 2012 US crop production.

Dry weather is expected in Argentina for the next 7 days followed some light rain, said John Dee, meteorologist for Global Weather Monitoring.

"Brazil should receive rains off and on for the next 10 days. All in all the forecast looks nearly ideal for South America," Dee said.