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GRAINS-U.S. wheat, corn rise on weather concern

Published 05/09/2011, 07:11 AM
Updated 05/09/2011, 07:16 AM
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* Wheat up 2 percent, weather concerns support

* Corn, soy also rise on rebound after selloff

* Weaker dollar spurs interest in commodities

* Coming up: USDA crop progress report 2000 GMT

(Adds details, updates prices, previous SINGAPORE)

By Naveen Thukral and Michael Hogan

HAMBURG, May 9 (Reuters) - Chicago wheat rose over 2 percent on Monday and corn added 1 percent as both rebounded from last week's lows as concerns about bad crop weather in the United States and Europe provided support.

Soybean futures also firmed, tracking strength in corn and crude oil as commodities recovered some way from their dramatic slump last week on improved risk appetite following better-than-expected U.S. job numbers.

"We are looking at the impact of weather on European crop and the picture of U.S. winter wheat doesn't look too good," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore.

An analyst at a European bank added: "We are seeing a return to fundamentals in grains markets following the meltdown last week, with dry weather in parts of France and Germany which could damage crops returning to focus."

"The weaker dollar is also generally supportive."

Chicago Board of Trade July wheat rose 2.14 percent to $7.75-3/4 a bushel by 1055 GMT in European trade on Monday as the market recovered from the lowest levels seen since mid-March reached in last week's selloff.

Chicago July corn gained 1.02 percent to $6.93-1/2 a bushel, while soybeans for July delivery rose 0.6 percent to $13.34-1/2 a bushel.

Last week, front-month corn fell 9.4 percent, its biggest weekly drop since October. Wheat futures fell 5.8 percent for the week and soybeans fell 4.9 percent in the largest weekly drop in commodity prices since 2008.

The wheat market was supported by a drought trimming U.S. winter wheat prospects and unfavourable weather in Germany, France, China and Canada also pointing to possible tighter supplies, particularly of higher protein wheat.

European benchmark wheat in Paris surged on dry weather worries in France and Germany.

Paris new crop November wheat was up 3.53 percent or 7.25 euros at 220 euros a tonne.

"North France, north Germany and Poland have not received enough rain in past days and concern about falling yields is growing," one European trader said. "Plants could still recover if they get rain but the window is starting to close."

"Attention was also returning to bad news about the U.S. crop last week which got forgotten in the commodity selloff."

Last week's tour of the Kansas wheat crop concluded that the state's hard red winter wheat production this year would be the smallest since 1996 at 256.7 million bushels. Global supplies of high-quality wheat have been on the slide over the past year, with excessive rains in top exporter Australia last year downgrading its crop.

The U.S. Department of Agriculture (USDA) will update its weekly crop progress report at 2000 GMT. The USDA will also issue on Wednesday its May supply-demand report, which will offer the department's first estimate of the winter wheat crop in the United States -- which accounts for nearly half of all U.S. wheat exports.

It will give its first estimate of ending stocks for this year's corn and soybean crops. Additionally, it will update global crop production numbers, including corn and soy production in Brazil and Argentina.

The euro rose on Monday as Asian and Middle East sovereign investors bought the single currency after a steep drop last week. A weaker dollar makes U.S. commodities attractive for overseas buyers holding other currencies. (Reporting by Michael Hogan and Naveen Thukral; Editing by William Hardy) ((michael.j.hogan@thomsonreuters.com Reuters messaging: michael.hogan.reuters.com@reuters.net +49 40 419 03 4275))

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