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GRAINS-Corn extends gains, wheat jumps on US winter crop concern

Chicago corn rose around half a percent on Thursday, building on this week's gains as tight global supplies underpinned the market, while wheat bounced back on support from dry weather threatening the U.S. winter crop.

Soybeans edged higher but the market remained under pressure on forecasts of bumper production in South America and expectations of a slowdown in Chinese imports following the second largest monthly purchases on record in December.

Front-month corn has risen 2.5 percent in four consecutive sessions of gains on positioning ahead of a key U.S. Department of Agriculture report that is expected to show tight global supplies.

In its final report on U.S. 2012 crop production, the USDA on Friday is expected to estimate last year's drought-decimated corn crop at a six-year low.

"Technically corn is looking the best as it has bounced from lows and the supply pipeline is quite tight," said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore. "The basis levels are very strong."

Chicago Board of Trade March corn rose 0.4 percent to $6.96-3/4 a bushel by 0357 GMT. March soybeans gained 0.2 percent to $13.88 a bushel while March wheat added 0.5 percent to $7.49-1/2 a bushel.

Spot basis bids for corn held at historically high levels for this time of year, supported by drought-reduced stockpiles and slow farmer sales.

The wheat market was lifted by concerns over the U.S. drought hurting the winter crop.

The government declared much of the central and southern U.S. wheat belt a natural disaster area on Wednesday due to persistent drought that imperils this year's winter wheat harvest.

In its first disaster declaration of the new year, the agriculture department made growers in large portions of four major wheat-growing states - Kansas, Colorado, Oklahoma and Texas - eligible for low-interest emergency loans.

The four states grew one-third of the U.S. wheat crop last year. Kansas was the No. 1 state at 382 million bushels.

There was additional support for wheat with rising demand from China. Wheat mills in China, the world's top consumer and producer of the staple, have resumed imports from the United States and Canada, spurred by record domestic prices.

China has bought several cargoes of high-protein wheat from the U.S. and Canada over the past few days and import orders are expected to increase as local supplies stay tight until May, when the new harvest hits the market.

Soybeans ticked up, tracking corn and wheat higher but the market is likely to face pressure from forecasts of record Brazilian production and slowing Chinese imports.

China bought 5.89 million tonnes of soybean in December, the second-highest monthly total after June 2010, as crushers stepped up imports ahead of February's Lunar New Year holiday, customs data showed.

But the nation is likely to scale back soybean purchases by more than third in January and February after buying unusually large amounts, with a drop in poultry consumption also signalling dulling appetite.

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