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GRAINS-Wheat Set For Biggest Weekly Gain In 6 Months On US Drought

GRAINS-Wheat Set For Biggest Weekly Gain In 6 Months On US Drought

Chicago wheat was on track on Friday to rack up its biggest weekly gain since July, as the worsening condition of the U.S. winter crop threatened to squeeze global supplies.

Soybeans firmed, taking their weekly gains to 4.4 percent, the largest in almost five months, as strong demand for U.S. supplies underpinned the market, while corn was shaping for its second week of gains.

A series of rainshowers helped ease drought conditions in parts of the United States over the last week, but the drought expanded in the parts of the U.S. Plains that produce the most U.S. wheat.

Officials in north-central Oklahoma declared a state of emergency over record low reservoir conditions and public and private interests throughout the central United States hardest hit by the drought were weighing steps to try to cope with it.

Soybean and corn prices were supported by a rebound in U.S. exports.

The U.S. Department of Agriculture pegged export sales of corn last week as the most in two months after foreign buyers bought U.S. cargoes at lower prices. The USDA pegged exports of soybeans as the largest since May in a week in which futures fell to roughly a two-month low on a continuous chart.

"Soybean exports are still very strong and it looks like China has been buying on price dips," said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore.

"I think prices and spreads will tighten until South American supplies come on board."

The International Grains Council on Thursday cut its forecast for global maize stocks at the end of the 2012/13 season to a nine-year low, reflecting an upward revision to consumption.

Global maize stocks were seen falling to 113 million tonnes by the end of the current season, down from a previous forecast of 116 million and well below the prior season's 133 million.

Wheat importers have also been snapping up cargoes on expectations that global supplies will tighten further.

Iraq has bought 300,000 tonnes of wheat from Australia and Canada in a tender for a nominal 50,000 tonnes. Tunisia's state grains agency has issued a tender to purchase 50,000 tonnes of soft milling wheat and 50,000 tonnes of durum.

In addition, Bangladesh, Ethiopia and Syria have issued international tenders seeking wheat supplies.

Chicago Board of Trade March soybeans rose 0.2 percent to $14.32-1/2 a bushel by 0233 GMT while March corn eased half a cent to $7.24 a bushel.

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