Wheat prices rise for a second day on short-covering, corn up 1 pct

(Reuters) – Chicago wheat futures prices rose for a second session on Friday with short-covering ahead of the U.S. Labor Day holiday weekend supporting prices, although the trend was set for a second week of declines amid plentiful world supplies.

Corn was up for a second day, recovering from a multi-year touched earlier this week and soybeans firmed after closing marginally higher on Thursday.

The Chicago Board of Trade most-active wheat contract gained 0.9 percent to $3.98-1/4 a bushel by 1135 GMT, adding to last session’s 1.7 percent gain.

Corn advanced by 1 percent to $3.27 a bushel while soybeans were up 0.8 percent at $9.51-1/2 a bushel.

“The low levels hit are encouraging American farmers not to sell, which may technically lead to a slight rebound in the short-term but without changing the underlying trend, which remains bearish in the absence of new elements,” French consultancy Agritel said.

For the week wheat is down 2.2 percent after dropping 8.4 percent last week, while soybeans have lost 1.6 percent following a decline of 3.7 percent a week ago. Corn is set to finish the week stable or slightly higher after dropping 5.5 percent last week.

There could be support for the wheat market on expectations that India will step up international purchases significantly over the coming months.

India’s production in the last two years has fallen well below the peak of 2014/15, reducing stocks to the lowest level in nearly a decade and pushing domestic prices close to record highs. Some traders expect them to climb still further this year.

Japanese buying could help shore up wheat as well after the country on Thursday resumed buying U.S. white wheat after a halt following the discovery of genetically modified strains in some U.S. crops in July.

Additionally, the drop in corn prices to the lowest level since 2009 this week is encouraging buying.

The USDA’s weekly export sales report showed sales of 214,100 tonnes of old-crop corn, above trade expectations, and 647,500 tonnes of new-crop corn, below expectations for 700,000 to 1,100,000 tonnes.

Brazil’s producers are not expected to plant significantly more area with soybeans in the new crop due to tight credit and the prospect of erratic weather, analysts at INTL FCStone said on Thursday.

The USDA’s weekly export sales report showed sales of 107,500 tonnes of old-crop soybeans and 1,476,400 tonnes of new-crop soybeans in the week to Aug. 25, in line with trade expectations.