GRAINS-U.S. wheat futures extend rally on dry weather threat
SYDNEY, May 17 (Reuters) - U.S. wheat futures climbed on Thursday, extending gains from the previous session when the grain posted its biggest daily price rise in 6-1/2 weeks, on concerns about dry conditions damaging the winter wheat crop. Chicago Board Of Trade July wheat futures rose 0.74 percent to their highest level since May 1 after soaring 5 percent on Wednesday, as weather concerns rattled the market. CBOT July soybean futures rose 0.56 percent, having climbed 0.6 percent in the previous session, while CBOT corn futures opened flat after rising 3.8 percent on Wednesday. FUNDAMENTALS * Investors covered short positions as the winter wheat-growing U.S. southern Plains looked to stay mostly dry this week, traders said. * Traders also worried by Russia drought, which analyst warned on Tuesday could cause irreversible damage to some crops in the south. * The U.S. Department of Agriculture said exporters sold 900,000 tonnes of U.S. corn to China, including 180,000 tonnes of old-crop supplies, even as China said it expected a record-large domestic corn crop in 2012. * The China National Grain and Oils Information Center projected on Wednesday a 7 percent drop in Chinese soy production this year, a reduction that would boost imports by the world's top buyer of the oilseed. * China's corn supply is expected to stay tight in 2012/2013 (Oct/Sept), leading to a continued increase in imports of the grain used mainly for animal feed production, according to estimates by an official think-tank. The China National Grain and Oils Information Center said China is expected to consume 199 million tonnes of the grain in 2012/2013, while domestic production has been projected at 197.5 million tonnes for the year. * Dry, warm weather forecast for the U.S. Midwest this week looked to aid corn and soybean planting, but some rain is needed to boost soil moisture in southern areas of the region. * Lawmakers loyal to President Cristina Fernandez scurried to gather the votes needed to raise land taxes in Argentina's No. 1 grains province on Wednesday, while farmers went on strike to fight the proposal. Industry insiders do not expect the planned five-day suspension of grains sales by Buenos Aires farmers to slow exports from Argentina, the world's third-biggest soybean supplier. But if lawmakers approve the tax hike, more protests could follow and international shipments could be disrupted. MARKET NEWS * The euro dropped to a four-month low against the U.S. dollar on Wednesday, sliding for a fourth consecutive session and likely to face more losses on fears about a Greek exit from the euro zone. * Crude oil futures tumbled on Wednesday, pressured along with U.S. equities as banking troubles in Greece sparked risk aversion across markets worried about euro zone debt. * U.S. stocks closed lower in a choppy session on Wednesday, with the S&P 500 logging its fourth straight decline as investors worried about Greece's future as a member of the euro zone. DATA/EVENTS (GMT) 0430 Japan Industrial output rev Mar 0700 Spain Q1 GDP 1230 U.S. Jobless claims Weekly 1230 U.S. Treasury Secretary Geithner speaks 1400 U.S. Leading indicators April 1400 U.S. Philadelphia Fed business activity index for May 1430 U.S. EIA natural gas stocks Weekly Grains prices at 0018 GMT Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 643.50 4.75 +0.74% -2.05% 614.11 69 CBOT corn 619.75 -0.25 -0.04% -5.88% 609.25 42 CBOT soy 1430.00 8.00 +0.56% +16.50% 1161.98 43 CBOT rice $15.19 $0.07 +0.46% +3.69% $14.45 48 WTI crude $93.17 $0.36 +0.39% -9.51% $98.63 17 Currencies Euro/dlr $1.274 -$0.020 -1.56% -2.37% USD/AUD 0.994 -0.043 -4.11% -4.14% Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential (Reporting by Colin Packham)
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