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U.S. grains edge higher, economic worries cap gains

Asian stocks and oil recovered following their recent sell-offs, but safe-heaven assets such as the yen and U.S. Treasuries retained their lustre, reflecting investors' caution towards the still-fragile global economy.

"We think the grain markets are still taking direction from oil price," said Tobias Merath, head of commodities research at Credit Suisse in Singapore.

"We really expect grains to trade more stable than the rest of the commodity complex going forward because grains are less dependent on interest rates and business. But there is no real trigger inside that could really spark a big price increase."

At the Chicago Board of Trade, January soybeans gained half a percent to $8.31 a bushel by 0338 GMT, triggering broad gains in corn and wheat.

December corn futures rose 0.5 percent to $3.34 a bushel and December wheat was up 0.2 percent to $5.10-Ða bushel.

Oil, which provides price direction to grains for their use in making biofuels, rose towards $48 a barrel, recovering from a tumble of more than $100 off July peaks, but the upside could be limited, with further signs of weakening oil demand expected in upcoming weekly U.S. oil data.

U.S. corn exports are lagging a year ago, underscored by export inspections that are off 38 percent from 2007 at 398 million bushels as of last Thursday.

Wheat inspections are also down, but only 13 percent, at 612 million bushels for the marketing year that began June 1.

Both are finding increased competition from the Black Sea region, Europe and Canada.

On top of worries over a global economic recession, easing South American crop concerns after weekend rains in top soy exporters Brazil and Argentina were also limiting grain market's upside.

In the United States, the world's largest corn exporter, scattered storms were expected to further hamper the late corn harvest, providing some support for the grain, which is trading near a 14-month low.

The corn harvest in the western U.S. Midwest continues to lag the five-year average, with North Dakota 70 percent complete and South Dacota 88 percent complete.

Many analysts expect USDA to shave its 2008 U.S. corn output figure due to the slow harvest pace, anticipating that farmers will have to leave some of the crop in the field.

Traders will have to wait until USDA's Jan. 12 crop report for final 2008 production numbers.

Grains prices as of 0338 GMT