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Soy up for 2nd day on tight supply; wheat rebounds

SINGAPORE/PARIS - Chicago soybeans gained more than 1 percent on Wednesday, rising for a second straight session, with support from tightening South American supplies and a lower-than-expected rating for the US crop.

Wheat regained some ground after Tuesday’s decline of more than 2 percent, while corn rose almost 1 percent, supported by broad-based strength in the commodity markets on the back of a softer dollar.

“Soybeans are up as USDA’s first crop condition ratings were lower and I think there are some adjustments being made in the South American crop,” said Brett Cooper, senior manager of markets at FCStone Australia. “For wheat, it is a bit of bargain hunting after the selloff last night and the US dollar weakness is supportive for all commodities.”

Chicago Board of Trade July soybeans added 1.2 percent to $13.66 a bushel by 1124 GMT. July corn also rose 1.2 percent to $5.74-1/2 a bushel and July wheat added 0.8 percent to $6.18 a bushel, after falling 2.3 percent in the last session.

The dollar index, which measures the strength of the greenback against a basket of currencies, fell 0.3 percent, making dollar-priced commodities attractive for importers.

A rise in the financial markets gave some support to agricultural products.

World shares and the euro gained on Wednesday as expectations grew that the acute financial problems in Spain and a deteriorating economic outlook would prompt Europe’s central bank to respond with more stimulus measures.

“Outside markets are dragging up ags this morning ahead of a key ECB meeting and Spanish bond auction,” FCStone Europe said in a note.

The oilseed market has been factoring in lower supply from Brazil, the world’s second largest exporter after the United States and the No. 3 supplier, Argentina.

Brazil’s government trimmed its 2011/12 soybean crop estimate on Tuesday after drought ravaged output this season. The country’s soy crop is now estimated at 66.37 million tonnes, after drought erased about 10 million tonnes of the crop’s potential, Conab data showed.

The US Department of Agriculture in its weekly report on Monday said the soybean crop was rated 65 percent good to excellent in its first estimate of the year of soy conditions. That fell below expectations for 69 percent good to excellent.

US corn ratings held steady, topping analysts’ expectations, despite continued dry weather in the Corn Belt.

“Even though crop ratings for corn were pretty much unchanged, people are cautious as there is a risk to the crop going forward, particularly in the southern part of the Midwest,” said Cooper.

Argentine farmers announced a one-week nationwide halt to grain sales on Tuesday to protest higher taxes in key farming province Buenos Aires, a move that lifted US soy futures as traders braced for tight supplies.

Already upset about the national government’s policy of wheat and corn export curbs that hurt profits, growers say the tax increase will force some of them to sell their fields.

Euronext milling wheat futures were mixed with benchmark November unchanged on a lack of new fundamental elements, traders said.