Soybeans Steady as Oil Rally Offsets Biofuel Worries

By Ella Cao and Gus Trompiz

BEIJING/PARIS, June 13 (Reuters) – Chicago soybeans ticked up on Friday on the back of a jump in crude oil prices after Israel conducted strikes on Iran, though the oilseed market remained capped by uncertainty over U.S. biofuel targets and expectations of abundant global supply.

Wheat edged higher to recover from an earlier four-week low, while corn eased to move back towards a six-month low from last week.

Favourable crop prospects continued to hang over grain markets, with relatively benign weather in the U.S. Midwest and the onset of wheat harvesting in the Northern Hemisphere.

The most-active soybean contract on the Chicago Board of Trade (CBOT) was up 0.2% at $10.44-3/4 per bushel, rebounding from a one-week low on Thursday. CBOT soyoil added 1.3%.

Oil prices jumped nearly 9%, hitting their highest in months after Israel said it struck nuclear and military sites in Iran, dramatically escalating tensions in the Middle East and raising worries about disrupted oil supplies.

“Rising crude oil prices lifted soyoil prices by making biodiesel more attractive, boosting demand for soyoil as a key biofuel ingredient,” said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

That brought relief for the soybean complex after renewed concern on Thursday about U.S. biofuel policy.

The U.S. Environmental Protection Agency (EPA) on Friday is expected to propose lower than-anticipated biofuel blending mandates, four sources told Reuters.

ADM , a key U.S. soybean crusher and biofuel producer, cut bids for soybeans this week ahead of the EPA announcement.

CBOT corn shed 0.7% to $4.35-1/2 a bushel.

The market shrugged off a tighter stocks forecast for U.S. corn in a monthly U.S. Department of Agriculture report on Thursday, which was broadly expected following brisk recent exports.

Supply pressure has built in corn and soybeans amid favourable growing weather in the U.S. Midwest and as Brazil begins harvesting what is expected to be a bumper second corn crop following a record soybean harvest.

CBOT wheat was up 0.8% at $5.30-1/2 a bushel.

The wheat market is facing seasonal harvest pressure in the Northern Hemisphere, where large crops are anticipated in the United States, Europe and Russia, despite mixed weather in recent months.

“The groundwork for higher prices is there but the time frame is months rather than weeks, and before that can happen, we have to go through North Hemisphere harvest pressure,” said Ole Houe, head of advisory services at IKON Commodities in Sydney.

(Reporting by Ella Cao and Lewis Jackson in Beijing and Gus Trompiz in Paris; Editing by Harikrishnan Nair and Shreya Biswas)