US grain and soybean futures were firmer on Monday, lifted by a rescue plan for banking giant Citigroup, but the rebound from sharp losses on Friday was modest as recession gloom persisted. Asian and European stocks rallied after the US government's weekend move to shoulder most of the potential losses on $306 billion of Citigroup's high-risk assets, easing doubts about the bank's ability to survive.
"The decision is positive for the grain market as it raises hopes for the stabilisation in financial markets," said Yoo Tae-won, a trader at Samsung Futures. December wheat gained 7-1/2 cents or 1.50 percent to $5.06-1/2 a bushel by 1106 GMT. January soybean contract climbed 13-1/4 cents or 1.58 percent to $8.53-1/4 a bushel.
December corn futures rose 3-1/2 cents or 1.03 percent to $3.42 a bushel after falling 7 percent on Friday to fresh 13-month lows amid demand concerns given a bountiful supply of feed wheat and an ailing corn-ethanol industry. But the rally was limited as the Citigroup bailout failed to dispel fears of a severe recession. Crude oil was choppy, trading either side of $50 a barrel.
US corn prices, which more than halved from a record high of $7.65 a bushel this summer, have come under increasing pressure as a glut of alternative feed grains such as wheat and barley as well as worries about the fate of US ethanol plants.
In the latest sign of troubles, bankrupt VeraSun Energy Corp, the largest publicly traded US ethanol maker, said on Friday it had stopped receiving and processing corn at certain plants while it seeks additional financing. The US Department of Agriculture will release its crop progress report on Monday after the close of trading, which will give the US grain industry a better idea of how much corn is left to harvest at the onset of winter.
Soybeans, meanwhile, found some support in concerns over dry weather in No 2 exporter Argentina. Dryness there is leading to concern about a poor start for that country's 2009 soybean crop and the Agriculture Secretariat said on Friday that dry soils forced Argentine farmers to halt soy sowing last week in many parts of the farming belt.
In morning Euronext trade, milling wheat futures eased slightly, with all contracts again hitting lows, as the market shrugged off the gains for US futures and focused on weak demand for a big European crop. Front-month January slipped 1.50 euros or 1.12 percent to 132.00 euros a tonne, a new contract low after a previous low point of 133.00 on Friday.
"We're nearly at the end of the year and there's no new demand," one trader said, stressing that Argentinean and Australian crops will add to competition in the new year. "We need to find outlets for our wheat." Euronext wheat contracts had already set lows on Friday as European grain was pressured by wider market gloom and unrelenting export competition from Black Sea grain.