LONDON -- U.S. rice futures firmed on Monday as short-term supply tightness offset forecasts that production could climb to record levels this year.
Wheat prices remained on the defensive, weighed down by forecasts for a record crop this year, while soybeans climbed on concern about a farmers strike in Argentina.
CBOT rough rice futures July delivery were up 22.5 cents or about 1 percent, at $23.20 per hundredweight at 1150 GMT as the market rebounded from a sharp setback on Friday.
The United Nations' Food and Agriculture Organisation on Monday said world rice output is expected to hit a record high this year but added growing demand and export curbs should keep prices high, at least in the short term.
"Prices are expected to remain extremely firm, at least until the third quarter of 2008, unless restrictions on exports are eased in the coming months," FAO rice expert Concepcion Calpe said in a statement on Monday.
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"At the moment, only Thailand, Pakistan and the United States, among leading exporters, are exporting rice without any constraints," Calpe added.
The U.S. Department of Agriculture on Friday forecast global rice production at a record 432 million tonnes in 2008/09, up 5 million from 2007/08, sparking a sharp decline in U.S. futures.
Concern about short-term supply tightness, however, was reinforced by news that Malaysia had delayed buying 500,000 tonnes of Thai rice on Monday after its bid failed to attract sale offers from Thai traders.
Thai rice prices were steady on Monday, as increasing supply weighed but fresh demand after prices dipped last week provided support.
Thai 100 percent B grade white rice was quoted at $920 per tonne, unchanged from last week, exporters said.
Indonesia plans to set aside 1 million hectares (2.5 million acres) for additional rice production, Agriculture Minister Anton Apriyantono said on Monday. Rice is the main staple for its population of 226 million people.
PERFECT WEATHER
CBOT wheat prices were steady while European markets drifted lower, weighed down by the prospect of a record world crop this year, dealers said.
"It is perfect growing weather," one European trader said.
The USDA on Friday forecast the world wheat crop would reach a record 656 million tonnes.
CBOT July soft red winter wheat futures were down a marginal 1/2 cent at $8.04 a bushel while new crop November milling wheat in Paris fell 2.00 euros to 194.50 euros.
Business in Europe was slowed by a Whit Monday holiday in several countries.
Pakistan has raised its wheat import target to 2.5 million tonnes this year from 1.5 million tonnes to build strategic reserves, the prime minister's office said in a statement on Monday.
CBOT corn prices edged up with July rising 1-3/4 cents to $6.31 a bushel.
Dealers said the market was consolidating after its recent advance to record highs.
"It probably hasn't got too much more on the upside. I think it has done enough," one European trader said.
CBOT July soybean futures were higher with July up 13-1/2 cents at $13.71-1/2 a bushel.
"Argentina is still the major talking point," one European trader said.
A farmers' strike in Argentina is unlikely to hit global vegetable oil supplies if it ends soon, as higher palm oil output would plug the gap in the near term, a senior official of Bunge said on Monday.
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