Soybean futures rose 1.6 per cent on Tuesday, and touched a one-month high, as traders cited news China bought optional-origin soybeans, talk that it may be looking for more, and concern about Brazil's ability to move its expected record-large soybean crop to port.
Corn futures posted modest gains, but wheat tumbled 1.5 per cent as investors took profits after the grain had climbed to a one-month top near $8 a bushel (all figures US$).
At the Chicago Board of Trade, CBOT March soybeans settled up 22-1/2 cents at $14.51-3/4 per bushel after reaching $14.60-3/4, the contract's highest since Dec. 19.
March wheat ended down 12 cents at $7.79-1/4 per bushel, retreating after hitting a one-month high at $7.99-3/4. March corn settled up one cent at $7.28-1/2 a bushel.
Soybeans advanced after the U.S. Department of Agriculture said private exporters reported sales of 120,000 tonnes of optional-origin soybeans to China for delivery in 2013-14.
Analysts said the profit margins for crushing soybeans in China have improved, encouraging processors to book additional cargoes.
"There is talk that China is back in, shopping for February and March," said Roy Huckabay at the Linn Group, a Chicago brokerage, adding that cash basis values for soybeans had firmed in some U.S. locations.
Support also stemmed from rumours that Brazil has over-booked soybean sales and worries about infrastructure limitations in that country, which is projected as the world's top soybean producer and supplier for the 2012-13 marketing year.
Analysts have questioned whether Brazil will be able to move its expected record-large soy crop to port in a timely manner. Adding to the concern, rains forecast in northern Brazil over the next two weeks are likely to slow the harvest.
"You have these rain delays and the combines are sitting there. It has given the market an indication that the next month and a half will be volatile. We're going to have ups and downs, and thoughts that maybe some demand is shifting back to the U.S. because of some of those delays," said Ken Smithmier, analyst with the Hightower Report in Chicago.
Strength in CBOT soybeans, he said, was "a function of concern that maybe supply is not going to get out of Brazil as quickly as some had anticipated."
CBOT wheat fell on profit-taking after the bellwether March contract rose in five of the previous six sessions but failed to breach psychological resistance at $8, peaking Tuesday at $7.99-3/4.
Part of the profit-taking involved traders unwinding inter-market spreads, including long wheat/short corn positions, a factor that underpinned corn. The premium for front-month CBOT wheat over front-month corn rose to 63-3/4 cents per bushel on Friday, but tumbled back to 50-3/4 cents at the close on Tuesday.
Adding pressure to wheat, Russia's deputy prime minister said the country was not ready to remove a grain import duty that would open Russia's market to foreign wheat to ease tight domestic supplies.
"The market is a little fragile after last week's 36-1/2-cent rally," one CBOT trader said, adding, "it needs a solid push to attack the 40-day average."
Wheat drew early support from a worsening drought across the U.S. grain belt and dryness in parts of Argentina.
"The main issue in North America is the dryness in the southern Plains," said John Dee, a meteorologist at Global Weather Monitoring.
Dee said it would be dry in the Plains and Midwest this week followed by light precipitation of 0.2 to 0.6 inch early next week, but then it would turn dry again.
Severe drought in the Plains left the condition of the U.S. winter wheat crop at a record low before it entered dormancy, the U.S. Agriculture Department said late last year.
Gains in corn were limited by concerns about a slowdown in the U.S. ethanol industry. Last week, Abengoa Bioenergy said it would temporarily halt ethanol production at two Nebraska plants in Nebraska due to "unfavourable market conditions."
-- Julie Ingwersen is a Reuters correspondent covering agricultural commodities markets in Chicago. Additional reporting for Reuters by Nigel Hunt in London, Naveen Thukral in Singapore and Sarah McFarlane in London.