Wheat firms as US crop in poor state for dry weather

HAMBURG, Apr 03 (Reuters): US wheat futures rose on Tuesday after the U.S. Department of Agriculture (USDA) assessed the condition of the U.S. winter crop was well below the previous year after recent dry weather in U.S. grain belts.

Soybeans and corn rebounded on continued support from unexpected USDA forecasts last week of smaller U.S. sown areas.

But fears of a U.S. trade war with China, a top buyer of agricultural products, kept investors on edge after Beijing announced higher tariffs on a long list of U.S. goods, including pork and ethanol.

Chicago Board of Trade most-active May wheat was up 0.8 per cent at $4.49-3/4 a bushel at 1002 GMT, having closed down 0.9 per cent on Monday.

May soybeans rose 0.6 per cent to $10.41-3/4 a bushel. Soybeans ended down 0.7 per cent on Monday after hitting a three-week high of $10.60-1/2. May corn was hardly changed, down 0.06 per cent at $3.87 a bushel.

The USDA late on Monday assessed only 32 per cent of the U.S. winter wheat crop in good to excellent condition, down from 51 per cent this time last year.

"Wheat is being supported today by the USDA crop report late on Monday with the condition of U.S. winter wheat assessed much lower than last year following the recent dry weather," said Matt Ammermann, commodity risk manager with INTL FCStone.

"The USDA's winter wheat crop rating of 32 per cent good to excellent was the lowest at this time I calculate since 2002. It is a bad national number and confirms the poor individual state numbers we have received in past weeks."

"The dry weather is having a negative impact on U.S. wheat and forecasts do not indicate a major improvement in the immediate future."

U.S. corn futures jumped nearly 4 per cent on Thursday and soybeans rose more than two per cent after the USDA surprised markets by forecasting reduced U.S. soybean plantings and a larger-than-expected drop in corn sowings.

"Soybeans and corn are again supported by the USDA's planting estimate on Thursday, so fundamentally are still looking strong," Ammermann said.

"But there is also the concern about the trade dispute with China damaging U.S. exports which is limiting gains. Soybeans and corn were not in China's list of products for trade retaliation but concern about the dispute damaging U.S. exports remains in the market today."