GRAINS-Corn at new week high before USDA, wheat up on drought
* Tight supplies support corn ahead of USDA report
* U.S. declares drought disaster in part of wheat belt
* Market eyes Egypt wheat tender, export data, USDA report
(Updates with European trading, changes dateline/byline) PARIS/SINGAPORE, Jan 10 (Reuters) - Chicago corn futures extended gains on Thursday to reach a new one-week high on the eve of closely watched U.S. government data that are expected to show a drop in U.S. production and tightening global supply. Chicago wheat also rose, bolstered by export demand and worries over the next U.S. harvest after the government declared a drought disaster in swathes of the wheat belt. Soybeans traded narrowly mixed, but the market remained under pressure on forecasts of bumper production in South America and expectations of a slowdown in Chinese imports after the second-largest monthly purchases on record in December. In its final report on 2012 crop production, the U.S. Department of Agriculture (USDA) on Friday is expected to estimate last year's drought-decimated corn crop at a six-year low. "Technically corn is looking the best as it has bounced from lows, and the supply pipeline is quite tight," said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore. "The basis levels are very strong." Chicago Board of Trade March corn rose 0.5 percent to $6.97-1/2 a bushel by 1215 GMT, while March wheat added 0.9 percent to $7.52-1/4 a bushel. Corn and wheat both traded at six-month lows last week following a year-end sell-off driven by investment funds, but attention has turned back to supportive fundamentals in the run-up to the USDA's crop estimates. Spot basis bids for corn held at historically high levels for this time of year, supported by drought-reduced stockpiles and slow farmer sales. The wheat market was lifted by concerns over the U.S. drought and the damage caused to this year's winter crop. The government declared much of the central and southern U.S. wheat belt a natural disaster area on Wednesday due to persistent drought. In its first disaster declaration of the new year, the Department of Agriculture declared growers in large portions of four major wheat-growing states - Kansas, Colorado, Oklahoma and Texas - eligible for low-interest emergency loans. The four states grew one-third of the U.S. wheat crop last year. Kansas was the No. 1 state at 382 million bushels.
EGYPT TIPPED TO BUY U.S. WHEAT AGAIN Export demand offered additional support for U.S. wheat. Wheat mills in China, the world's top consumer and producer of the staple, have resumed imports from the United States and Canada, spurred by record domestic prices. Relatively cheap U.S. wheat was also tipped by traders to claim a fresh sale to Egypt in the latest tender being held on Thursday by the world's top wheat importer. Operators are also awaiting weekly U.S. export data later on Thursday, ahead of Friday's USDA report that will include U.S. production, quarterly stocks, wheat seedings as well as global supply and demand. "All in all, an awful lot for the market to digest," INTL FC Stone Europe said. "Expect some very, very volatile trade in the next 48 hours." In oilseeds, trade in soybeans was hesitant as spillover support from corn and wheat balanced against downward pressure due to forecasts of record Brazilian production and slowing Chinese imports. China bought 5.89 million tonnes of soybean in December, the second-highest monthly total after June 2010, customs data showed. "Lower soybean imports can be expected over the coming months as imports have probably been anticipating future demand to some extent," Commerzbank analysts said in a note. "What is more, the Chinese New Year festivities are just around the corner, which are also likely to be accompanied by lower demand." Prices at 1215 GMT
Last Change Pct MoveCBOT wheat 752.25 6.75 +0.91 CBOT corn 697.50 3.25 +0.47 CBOT soy 1385.50 0.00 +0.00 Paris wheat 247.75 1.00 +0.41 Paris maize 237.50 1.25 +0.53 Paris rape 463.50 -2.25 -0.48 WTI crude oil 94.29 1.19 +1.28 Euro/dlr 1.31 0.04 +0.28 * CBOT futures prices are in cents per bushel, Paris
futures in euros per tonne, WTI crude oil in dollars per barrel.
(Editing by Clarence Fernandez and Jane Baird)