GRAINS-Wheat rises on demand hopes, soy up as harvest winds down

Mon Oct 22, 2012 2:55pm EDT

Related Topics

* Wheat up fourth straight day, eye on export demand

* Corn harvest seen 89 pct done, soybeans 82 pct

* Soybeans higher by slow farmer selling, firm basis values

* Traders expect Ukraine to ban wheat exports (Adds forecast for Brazilian soy crop)

By K.T. Arasu

CHICAGO, Oct 22 (Reuters) - Chicago wheat futures rose for a fourth straight session on Monday amid expectations a likely export ban in Ukraine would shift demand to the United States, and on concerns over dry weather in the southern Plains bread basket.

Soybeans rallied to recoup Friday's losses as the largest harvest in the world began to wind down in the United States. Farmers were storing much of their crop, helping to strengthen prices in the cash market at some locations in the Midwest.

Cash grains merchandisers said basis bids for soybeans in Indiana jumped 14 cents per bushel, while in Iowa, they climbed 5 cents. The market was also supported by strong export demand, led by China, despite concerns over a slowdown in its growth.

U.S. farmers were expected to have completed 89 percent of their corn harvest by Sunday, and 82 percent of their soybeans, according to a Reuters poll.

The U.S. Department of Agriculture will update the harvest progress in its weekly report to be issued on Monday afternoon.

"Basis values are improving and the market typically finds the lows when we get past 50 percent of the harvest," said Brian Hoops, president of Midwest Market Solutions.

He was expecting funds to buy corn futures at the Chicago Board of Trade when the December contract breaks the 50-day moving average at $7.73-3/4 a bushel - just about 10 cents above where the contract was trading on Monday morning.

"We are just a dime away from funds coming into the corn market," he added.

Price for CBOT March soybeans and beyond gained less than the front months because of expectations for a record-large soybean crop in Brazil, the world's No 2 exporter, which typically begins hitting export markets in March.

Brazilian analyst Safras e Mercado raised its estimate of the country's soybean production to a record 82.5 million tonnes from 82.3 million in July due to farmers expanding the area to be planted with the oilseed.

CBOT December wheat gained 0.4 percent to $8.76-1/4 a bushel by 1:35 p.m. CDT (1835 GMT). November soy climbed 0.8 percent to $15.46 a bushel and December corn edged up 0.13 percent to $7.62 a bushel.

CBOT November soybeans have slumped 14 percent, or about $2.49, f rom the all-time high of $17.94-3/4 per bushel set on Sept 4, as timely rains in August boosted yields, leading fund managers to cut their bullish bets in the market.

The wheat market has been rallying since last week on speculation by traders that Ukraine, the world's ninth-largest exporter, would ban exports from Nov. 15 because dry weather reduced production by about one-third this year.

There was also support from concerns over dry weather in the Southern Plains wheat belt.

"There's not a whole lot of rain for the next week to 10 days," said John Dee, a meteorologist for Global Weather Monitoring.

Ukraine's agriculture ministry said on Friday that the current strong pace of wheat exports would exhaust the country's stocks available for shipping abroad by Nov. 15-20.

It said traders had signed agreements to export 3.57 million tonnes of wheat as of Oct. 18.

The USDA has forecast Ukraine wheat exports this year at 4 million tonnes on a crop of 15.5 million tonnes.

Traders said Ukraine's likely ban on wheat exports would also be supportive for corn as a sizable portion of Ukrainian wheat is used as a corn substitute in feed.

"It is bullish although not a runaway bullish story like two years ago," Brandon Kliethermes, a senior economist at Global Insight-IHS said, referring to an export ban by Russia that led to a significant rally in wheat futures.

"We knew something was coming, that there would be some sort of export limitations," he said, adding that any ban by Ukraine could help U.S. corn exports. "U.S. corn is still overpriced but this (Ukraine ban) could turn the tide."

Russia's agriculture minister, Nikolai Fyodorov, has said he would oppose any ban on grain exports, quashing speculation the country could follow Ukraine, RIA Novosti reported.

(Additional reporting by Ivana Sekularac in Amsterdam and Naveen Thukral in Singapore; editing by Andrew Hay and Maureen Bavdek)

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