Chicago corn and soybeans steady after rallying on weather and China demand

hicago corn and soybean futures were steady on Tuesday, pausing after a day-earlier rally sparked by weather concerns and talk of renewed Chinese demand for U.S. crops, analysts said.

Higher crude oil prices, following reports of attacks on vessels near the Strait of Hormuz, helped underpin corn and soybeans, which are widely used for biofuel.

Wheat edged lower after tracking the jump in corn on Monday, with harvest progress in the northern hemisphere taking attention away from poor U.S. wheat conditions.

Forecasts of hot, dry weather in parts of the Midwest, following a heatwave late last week, stirred concerns about stress to corn crops approaching pollination, echoing fears about damage to corn in Western Europe after a torrid start to summer.

"Funds have quickly added length and are watching each U.S. weather model run to see what's next," Peak Trading Research said in a note.

Corn and soybean conditions remained mostly favourable last week, according to a U.S. Department of Agriculture report issued after Monday's market close.

U.S. corn conditions held steady, with 67% of the crop rated good or excellent, while the equivalent soybean score edged down one percentage point to 64%.

China's state-owned trader COFCO bought at least five cargoes, or at least 300,000 metric tons of U.S. soybeans on Monday for shipment between September and November, two U.S. traders with knowledge of the deals told Reuters.

The report followed speculation about renewed Chinese interest in U.S. beans against a backdrop of a commitment by the two countries to expand agricultural trade.

Washington has referred to a Chinese pledge to buy 25 million metric tons of U.S. soybeans annually, a target that has not been confirmed by Beijing.

The most-active soybean contract CBOT:ZS1! on the Chicago Board of Trade ticked up 0.15% to $11.94 a bushel by 1055 GMT. It earlier set a new one-month low at $11.97-3/4 but held below the psychological $12 threshold.

CBOT corn CBOT:ZC1! inched up 0.05% to $4.58 a bushel, after hitting a fresh one-month high at $4.59-1/2.

CBOT wheat CBOT:ZW1! was down 0.08% at $6.13-1/2 a bushel, easing from a two-week peak on Monday.

News on Monday that Saudi Arabia had purchased 661,000 metric tons of wheat in a tender showed some fresh demand, though reaction was tempered by aggressive prices quoted and expectations that Black Sea origins would cover most of the order, traders said.