US corn firms

US corn futures rose nearly 1 percent on Monday, after rising by the daily limit in the previous session, as investors stepped up buying following lower US crop estimates and growing worries about its banking sector.
Analysts added grain markets could additional find support from a worsening outlook for the US dollar, which weakened against the yen and the euro as talks to rescue Lehman Brothers Holdings faltered, fuelling concerns over the stability of the US financial system.
"Commodity prices will be positively influenced by these developments," said one grains analyst. A weak dollar makes imports of dollar priced commodities cheaper. Soybean prices were slightly lower, but freak weather in the key-growing US Midwest region could push the market higher, analysts said.
"We have had a full weekend of pretty crazy weather in the United States and now is the first opportunity to get in and start trading," said John Reeve, associate director for agricultural commodities with UBS AG in Singapore. "Bullish news from the USDA and another bout of adverse weather we think is supportive for corn and soybeans. "The contract surged 26 cents in the previous session after the government estimated lower output and forecasts of heavy rainfall threatened early harvest.
Front-month corn has lost a quarter of its value since hitting a record high of $7.65 per bushel in June when floods threatened output. Soybeans have dropped around 30 percent since peak in July.
September soy contract jumped 22.5 percent on Friday as traders paid dearly to cover short positions for beans they could not physically deliver when the contract expired at midday. The euro jumped one percent to a one-week high against the dollar on Monday, spurred by worsening sentiment on the dollar as the Federal Reserve and major US banks tried to boost liquidity and mitigate volatility.
USDA's estimate for this year's soy production was down 1 percent from the outlook in August. The corn production number was down 2 percent from the August forecast. US corn and soybean supplies will keep shrinking to critically low levels, ultimately lifting prices for each, a panel of analysts said after the report was released on Friday.
Wagner and David Hightower of the Hightower Report both expect further declines in the corn and soybean yields per acre and final 2008 production numbers. December wheat contract was up 0.80 percent at $7.25 per bushel in thin Asian trade of less than 1,000 lots. "Wheat prices will come under pressure going forward from a record global wheat crop," said Reeve. "In Australia, it is going to be a pretty good crop, its still going to be in the vicinity of 20 million tonnes."