GRAINS-Chicago soy higher after US government slashes Argentina estimate

By Cassandra Garrison

MEXICO CITY, April 11 (Reuters) – Chicago soybean futures climbed on Tuesday while corn and wheat ticked down as markets reacted to smaller U.S. government crop forecasts for Argentina’s soy and corn production.

Soybean and corn production in Argentina will be smaller than previously thought at 27.00 million tonnes as a crop-wasting drought decimated fields in the key South American producer, according to the U.S. Department of Agriculture.

“They did make a bigger cut than expected to Argentina soybeans, but I think that is probably more in line with where the market may have thought it is going, especially how aggressive the Argentine exchanges have been,” said Craig Turner of Daniels Trading.

Argentina has endured severe drought while rival corn and soy exporter Brazil has seen more favorable conditions.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 rose 0.59% to $14.96 a bushel by 1135 CDT (1635 GMT).

CBOT corn Cv1 inched down 0.5% to $6.50-3/4 a bushel and wheat down 0.18% to $6.77-1/4 a bushel.

In the United States, traders have been grappling with contrasting weather, with early spring planting slowed by damp, cold conditions and some winter wheat crops strained by drought.

“I think we’re going to quickly go back to trading North and South American weather at this point,” said Terry Reilly, a senior analyst at Futures International.

Uncertainty over Black Sea supply – with Russia threatening on Friday to bypass a U.N.-brokered grain deal allowing shipments from Ukraine – also underpinned wheat markets.

The USDA raised its export estimates for corn and wheat from Ukraine slightly on Tuesday.

“Any time Russia says something about the grain deal that’s bullish for grains, there’s a market opportunity to take. But no matter what, they want to export that grain,” said Mark Gold of U.S. Consultancy Top Third Ag Marketing.

(Reporting by Cassandra Garrison in Mexico City, P.J. Huffstutter and Karl Plume in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Subhranshu Sahu, Sonia Cheema, Will Dunham and Paul Simao)

((Cassandra.garrison@thomsonreuters.com ))

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