NEW DELHI (Reuters) - U.S. soybean futures for May extended gains on Wednesday after rallying more than 1 percent a day earlier due to mounting concerns over tight supplies from drought-hit South America.
Lower output forecast by Ukraine helped wheat edge higher, while corn rose as the United States Department of Agriculture (USDA) confirmed large exports to an unknown buyer, believed to be China.
Chicago Board of Trade soybean for May delivery rose 0.52 percent to $13.55-3/4 a bushel by 12.45 a.m. EDT, after closing at its highest level since mid-September 2011.
May wheat gained 0.08 percent to $6.49-1/2 a bushel, while corn rose 0.04 percent to $6.62-1/4 a bushel.
"Production estimates have been lowered again by a number of forecasters, including the USDA and that is the reason behind the rise in soybeans," said Malcolm Bartholomaeus, editor of ProFarmer, a Perth-based farm advisory.
Drought has reduced Brazil's soybean crop by 9 percent in the past three months and Argentina's harvest by 11 percent, the Department of Agriculture (USDA) said on Friday, with the cuts larger than traders had expected.
Brazil and Argentina together grow almost half of the world's soybeans and oilseed analysts Oil World said export prospects for U.S. soybeans were improving, as demand from China is likely to increase.
"The crop outlook looks poor in South America while demand for beans and oils look very strong from a number of countries, including China," Bartholomaeus said. "Buyers are stocking up soybeans by purchasing from the U.S."
There are reports of water scarcity in China's own soybean belts and there is also talk that China will transfer more land to corn from soybean in an attempt to become self-sufficient in grains, Oil World said. Last month, China signed deals with U.S. grain companies to buy 8.62 million tonnes of soybeans.
U.S. wheat prices, which had drifted lower on Tuesday under pressure from improving U.S. crop weather, rose slightly, catching up with gains in the European market due to strong French demand.
Prices were also supported by Ukraine's Agriculture Ministry cutting its 2012 wheat harvest forecast to 15.4 million tons, down 2.20 million tons, after winter plantings suffered from drought and frost.
Grains prices at 12.45 a.m. EDT
Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 649.50 0.50 +0.08% -0.27% 654.78 51 CBOT corn 662.25 0.25 +0.04% +0.42% 645.48 65 CBOT soy 1355.75 7.00 +0.52% +1.59% 1286.53 83 CBOT rice $14.36 $0.02 +0.14% +0.07% $14.30 56 WTI crude $106.83 $0.12 +0.11% +0.46% $103.74 55
Currencies Euro/dlr $1.307 -$0.008 -0.61% -0.29%
Editing by Miral Fahmy