US corn adds to gains ahead

"Corn consumption in the U.S. has been quite high, particularly for use in ethanol production where demand has been quite sticky and has shown little sign of abating despite high prices," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia.

Chicago Board of Trade revealed that corn for July delivery rose 0.26 percent to $7.66 per bushel by 0358 GMT, following a 3.7 percent surge on Wednesday, also bolstered by rising oil prices after OPEC failed to agree to raise production targets.

Prices for the July contract are approaching a record high of $7.88-3/4 struck on April 11, when concerns about delays in planting this year's U.S. crop because of rain were dominant.

"The USDA is also likely to cut its corn yield forecast for the 2011/12 crop as delayed plantings impact on yields," said

Mathews.

Wheat prices also rose and were dragged up by corn, although supply fundamentals for wheat were less tight than for corn even though the U.S. winter wheat crop had struggled because of drought.

Wheat for July delivery rose 0.60 percent to $7.52-1/2per bushel, adding to a nearly 2 percent rise on Wednesday when the grain snapped a two-day losing streak.

Wheat's gains are being capped by Russia, once the world's third largest wheat exporter, returning to the export market in the coming crop season.

Last year a severe drought slashed its crop by a third, prompting the government, fearful of shortages, to ban grain exports from August last year. Prime Minister Vladimir Putin last month said the ban would expire on July 1.

"Macro events are also supporting prices, with oil prices up and the U.S. dollar weak," said Mathews.

Still, soybeans for July delivery eased 0.11 percent to $14.00 per bushel as high prices have seen China, the world's top soy importer, shunning the U.S. market in recent weeks.

As well, alternative supplies are flowing from South America where bumper harvests have been reaped.

The Brazil government crop agency said on Wednesday this year's harvest produced a record 75 million.

Copyright Reuters, 2011