* Soy, wheat biggest annual gainers on TRJ CRB index
* Corn on track for fourth straight year of gains
* Demand for US grain eased in Q4 after drought-driven rally
(Recasts, updates prices, adds new analyst quote)
By Mark Weinraub
CHICAGO, Dec 31 Wheat and soybean futures edged
lower on Monday, but ended the year as the best performers in a
basket of commodities, including crude oil, as demand lifted
prices and the worst drought in half a century crimped supplies.
Wheat posted the biggest gain this year among the 19
commodities in the Thomson Reuters-Jefferies CRB index
, soaring 19.2 percent despite falling for three
straight months and tumbling 7.9 percent in December alone.
Traders were concerned about wheat crops from Australia to
Europe due to weather problems throughout the year and the poor
start in the U.S. winter wheat regions as drought persisted in
the southern Plains.
Soybeans were the second best gainer, rising 18.4 percent,
while corn was up 8 percent, notching its fourth straight year
of gains despite ending 2012 with a five-month losing streak.
Corn and soybeans set record highs this year amid the
drought, which came on the heels of a rapid planting pace in the
spring due to an unseasonably mild winter.
Wheat was pressured by poor export demand for U.S. supplies
on Monday while soybeans dropped on favorable crop weather in
South America but the market found support in thin New Year's
Eve volume on hopes that lawmakers in Washington found a
solution to avert the so-called fiscal cliff.
"If we get some sort of reconciliation out of the process,
it would be price positive for most of our markets," said Bill
Gentry, a broker with Risk Management Commodities in Lafayette,
Indiana. "It would be a sigh of relief."
The failure to reach a deal could weaken the global economy
and further roil demand for U.S. commodities.
Wheat, corn and soybeans have outperformed the CRB, which
was down 3.3 percent for the year.
The grain markets have pulled back sharply in recent months,
with soybeans down 11.4 percent in the fourth quarter, its worst
quarter since the third quarter of 2009. The loss broke a streak
of four positive quarters in a row.
Corn was off 7.3 percent in the fourth quarter due to
weakening demand from exporters as well as from ethanol
producers, and wheat has fallen 13.8 percent over the last three
months of the year. Both grains notched their worst quarterly
performance since the second quarter of 2011.
The weakness in wheat worsened in December as export demand
failed to show up even as prices retreated near six-month lows.
The front-month contract was down 7.9 percent for the month, the
biggest monthly decline since September 2011.
Short covering limited Monday's decline in wheat, traders
CBOT March wheat settled down 3/4 cent at $7.78 a
bushel. CBOT January soybeans were 5-1/4 cents lower at
$14.18-3/4 a bushel and CBOT March corn was 4-1/4 cents
higher at $6.98-1/4 a bushel.
Bargain buying lent support to corn prices.
"Everybody is waiting for the outcome of U.S. budget talks
and there is some year-end positioning," said Serene Lim, a
commodities analyst at Standard Chartered Bank in Singapore.
President Barack Obama said on Monday that a deal with
Congress to avoid the U.S. "fiscal cliff," with its tax
increases looming at midnight, was close, but he warned that it
was not yet complete.
The outlines of a deal in the U.S. Senate include raising
income tax rates for individuals making more than $400,000 a
year and households making more than $450,000 a year, but a
sticking point remains on how long to delay automatic spending
cuts to defense and domestic programs.
Prices at 2:35 p.m. CST (2035 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 698.25 4.25 0.6% 8.0%
CBOT soy 1418.75 -5.25 -0.4% 18.4%
CBOT meal 420.60 -7.10 -1.7% 35.9%
CBOT soyoil 49.16 0.22 0.5% -5.6%
CBOT wheat 778.00 -0.75 -0.1% 19.2%
CBOT rice 1486.00 -9.50 -0.6% 1.7%
EU wheat 250.50 -0.75 -0.3% 23.7%
US crude 91.62 0.82 0.9% -7.3%
Dow Jones 13,053 115 0.9% 6.8%
Gold 1673.10 18.20 1.1% 7.0%
Euro/dollar 1.3190 -0.0021 -0.2% 1.9%
Dollar Index 79.8080 0.1300 0.2% -0.5%
Baltic Freight 699 -1 -0.1% -59.8%
In U.S. cents, benchmark contracts, except EU wheat (euros) and
soymeal (dollars). CBOT wheat, corn and soybeans per bushel,
rice per hundredweight, soymeal per ton and soyoil per lb.
(Reporting by Mark Weinraub; Editing by Bob Burgdorfer)