Wheat extends gains on strong demand, tightening supplies

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SINGAPORE - Chicago wheat futures rose for a second session on Thursday, buoyed by strong demand and tightening global supplies.

Soybeans rose too but gains were capped by a lack of Chinese buying and U.S. harvest pressure.

The Chicago Board of Trade's (CBOT's) most-active wheat contract was up 0.4% at $5.23 a bushel, as of 0307 GMT, soybeans gained 0.2% at $9.35-1/2 a bushel and corn rose 0.5% to $3.89-1/2 a bushel.

"The global trend is towards tightening of wheat supplies, although the market remains reasonably well supplied," said Phin Ziebell, agribusiness economist at National Australia Bank. "We have seen pretty strong demand recently and buyers are paying higher prices."

Wheat prices have been supported by expectations of lower production in the Southern Hemisphere.

Australia's wheat production is expected to drop to 15.5 million tonnes, National Australia Bank said last week as it cut its forecast to well below recent market estimates.

Grain importers in the Middle East and North Africa have been snapping up wheat cargoes, underpinning prices.

Beijing on Tuesday offered major Chinese and international soybean processors waivers that would exempt the companies from steep tariffs on imports of up to 10 million tonnes of U.S. soybeans, according to two people briefed on the matter.

The news, however, failed to unleash a torrent of soybean buying by the world's top soybean importer.

Commodity funds were net buyers of CBOT wheat, corn, soybean and soymeal futures contracts on Wednesday and net sellers of soyoil futures, traders said.

(Reporting by Naveen Thukral, Editing by Sherry Jacob-Phillips and Rashmi Aich)