Chicago wheat prices rose on Monday on growing concern that the size of the crop in the European Union, the world's largest exporter of the cereal, could be lower than expected, pulling up corn in their wake. Soybeans rebounded slightly from a three-month low hit in the previous session when forecasts of near-perfect weather during next month's yield-determining phase for the U.S. crop dragged on prices.
The Chicago Board of Trade (CBOT) most-active wheat contract was 1.7 percent higher at $4.32-1/2 a bushel by 1031 GMT, after falling in the previous session near a 10-year low, pressured by ample U.S. supplies.
Prospects for the soft wheat harvest has deteriorated sharply in Europe due to worse-than-forecast damage from torrential spring rain, prompting analysts to cut crop estimates in top grower France to their lowest in 13 years.
Consultancy ODA Groupe expects the French 2016 crop to be less than 30 million tonnes, down from 32 million seen last week and 35 million in a July 6 estimate, it told Reuters on Friday. The 2015 crop was at a record 41 million tonnes.
Germany's crop has also suffered, albeit to a lesser degree. "Many short-term oriented market participants are likely to have seen this as good reason to reduce their record-high net short positions," Commerzbank said in a note.
Euronext September milling wheat gained another 1.3 percent to 176.25 euros per tonne on Friday after hitting a near six-month high in morning trade at 177.25 euros, and surging 9 percent in two sessions at the end of last week.
CBOT corn tracked wheat's rise after trading in negative territory overnight, up 0.5 percent at $3.43-1/2 a bushel.
The gains were capped, however, by bearish news that Argentina's trucking industry had struck a deal with the government over hauling rates, the country's FETRA transportation union, ending a four-day strike that had begun to slow corn exports.
Soybean rose 0.15 percent to $9.89-3/4 per bushel, having closed down 2.4 percent on Friday when prices hit $9.66-1/4 a bushel, their lowest since April 19.
"Last week's much advertised heat wave waned more quickly than forecasters had first anticipated," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.
"While pockets of dryness remain, much of the Midwest, Delta and Southeast are likely to receive solid rainfall this week to help replenish any lost topsoil moisture."
The latest weather outlook called for good conditions during August, a key period for growth for the soybean crop.
(Editing by Himani Sarkar and David Evans)