LONDON - Chicago wheat futures were slightly higher on Tuesday with a cut in the forecast for Australia's crop helping the market to rebound from an earlier 3-month low.
Soybean futures rose with bargain buying and technicals boosting prices that fell to a contract low last week, while corn also edged higher.
Chicago Board of Trade March wheat rose 0.9 percent to $4.79-3/4 a bushel by 1257 GMT. The contract had earlier dipped to a low of $4.74, its weakest level since early September.
Production of wheat, Australia's largest winter crop, for the season ending July 1, 2016 was forecast to be 23.98 million tons, down 5.2 percent from its previous estimate in September of 25.28 million tons, the Australian Bureau of Agricultural and Resource Economics and Sciences said.
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"Australia is currently experiencing the strongest El Nino weather phenomenon in 20 years, which is bringing very dry weather to growing regions, predominately the east coast," analyst Anna Lockwood of Britain's Agriculture and Horticulture Development Board said in a market note.
But dealers said the wheat market remained on the defensive, weighed down by lackluster demand and an improving outlook for U.S. winter crops.
"There is more downside for wheat as export demand for U.S. wheat is reducing and we are seeing favorable crop production prospects," Kaname Gokon at brokerage Okato Shoji in Tokyo said.
"Overall the market is trapped in a bearish trend."
U.S. winter wheat was rated 55 percent good-to-excellent as of Sunday, compared with 53 percent a week ago and higher that the market expectation of 54 percent, the U.S. Department of Agriculture said in a report after the market closed on Monday.
March wheat in Paris fell 0.25 euros or 0.1 percent to 181.50 euros a ton.
Soybeans gained on bullish technicals after falling to a life-of-contract low on Nov. 23.
CBOT March soybeans rose 0.7 percent to $8.89-3/4 a bushel.
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The contract is expected to climb to $8.95-1/4 as it has cleared a resistance at $8.77-3/4, according to Reuters market analyst for commodities and energy technicals Wang Tao.
CBOT March corn was up 0.6 percent at $3.74-1/2 a bushel.
