U.S. soy up on Chinese buying, Argentine weather

PARIS/SINGAPORE (Reuters) - Chicago soybean futures rose slightly on Wednesday as strong Chinese demand and dry weather in Argentina offset the economic gloom gripping wider markets.

Corn and wheat were steady after dropping in the previous session but demand worries for corn and heavy global supplies in wheat prevented a rally.

"If you look at the Chinese market it is all positive today, beans, bean oil, soymeal, palm oil are all up," one dealer with a Singapore-based international trading house, said.

"On top of that there is some dryness in Argentina which is causing concerns."

Chicago Board of Trade January soybeans rose 5-1/2 cents or 0.61 percent to $9.07-1/2 per bushel by 1114 GMT.

Parched soils are forcing Argentine farmers to delay 2008/09 soy sowing, but rains are forecast to arrive next week and the soy area is not seen shrinking for now, according to weather specialists.

The most-active soybean contract on China's Dalian exchange finished up more than 3 percent in volume of more than 600,000 lots.

"There is buying opportunity coming from China, demand from China is supporting soybeans to hold above $9.00 per bushel," Kaname Gokon, deputy general manager at commodities trader Okato Shoji Co in Tokyo, said.

RECESSION FEARS, BIG SUPPLIES

Traders said worries over the health of the global economy continued to weigh on the grains market, which would prevent a big rally in prices.

Equities and crude oil retreated on Wednesday, with a late overnight rally on Wall Street doing little to offset worries that the global economy's sharp slowdown will take a severe toll on corporate profits and consumer spending.

Corn for delivery in December was up 1-3/4 cents or 0.46 percent to $3.81-3/4 per bushel while December wheat inched up half a cent to $5.30-1/2 per bushel. Corn fell 5-3/4 cents and wheat dropped 4 cents in U.S. trade on Tuesday.

Crude oil, which provides price direction to grains used in making biofuels, eased slightly to just above $54 a barrel ahead of data expected to show U.S. crude stocks rose last week.

In corn, traders said imports by Japan, the world's biggest buyer, remained slow despite around a 50 percent decline in prices of the grain since June.

"In Japan, the feed manufacturers have shipped some quantities for the January-March quota, some limited cargoes have been initiated," Nobuyuki Chino, president of Tokyo-based Unipac Grain, said.

He said Japanese traders had bought some 300,000 tonnes of corn for the first quarter of 2009, compared with around 1 million tonnes contracted for first quarter 2008 by this time last year.

A downturn in meat consumption around the world has hit demand for corn, along with an ailing U.S. ethanol industry that relies on corn, traders say.

USDA is currently estimating the 2008 U.S. corn crop at 12.02 billion bushels, the second largest in history.

In wheat, Euronext futures were little changed in early Paris trade as prices remained tied to a consolidation zone around 140 euros a tonne.

"The market is living off old business but there is clearly very little new activity taking place," one European trader said. "The market is still waiting to see what happens with the harvests in the southern hemisphere."

Front-month January wheat was up 0.25 euros or 0.18 percent at 140.00 euros a tonne, with later month contracts also trading at 140 euros.

While the support zone between 138 and 142 euros is holding firm at the moment, fundamentals remained bearish in view of ample global supplies, traders said. Grains prices as of 1114 GMT

(Writing by Gus Trompiz; editing by Sue Thomas)