Soybean futures advanced in Chicago on signs supplies from the U.S., the world's largest exporter, may tighten before the next harvest as dry weather threatens the crop in China. Wheat in Paris climbed 3.8 percent, the most in four months.

Soybean stockpiles from last year's crop totaled 571 million bushels as of June 1, the smallest since 2004, the U.S. Department of Agriculture said yesterday. Soybean and corn crops in northeast China "appear to be somewhat at risk due to periodic hot weather," Telvent DTN Inc. said yesterday.

"That's something the market has been focusing some attention on: the Chinese weather outlook," Toby Hassall, a research analyst at CWA Global Markets Pty, said by phone from Sydney.

November-delivery soybeans rose as much as 0.7 percent to $9.09 a bushel on the Chicago Board of Trade and were at $9.0525 a bushel at 11:54 a.m. in London.

Milling wheat for November delivery jumped 3.8 percent to 136.5 euros ($168.35) a metric ton on the Liffe exchange in Paris. A close at that price would be the biggest one-day gain since Feb. 25.

Dry weather in the U.K. has the "potential to impact yield" of the wheat crop harvest that will start late this month, said Susan Twining, an analyst at ADAS U.K. Ltd., in Cambridgeshire, England. The U.K. winter wheat crop will be an estimated 15.5 million to 16 million tons this year, up from 14.4 million tons last year, she said.

David Fuller's view Chicago's grain and bean prices last soared in 2007 and 1H 2008 before falling sharply during the stock market meltdown later that year. Prices had remained generally subdued subsequently due to favourable growing conditions. The main exception was a technical rebound early in last year's Northern Hemisphere crop cycle which was swiftly reversed.

However there appear to be some weather-related risks at today's stage of the crop cycle for China and Europe, mainly due to hot, dry conditions.

In past cycles early weather concerns seldom create the damage to crop yields initially. Biochemists and agronomists have breed more drought and disease resistant crops over the decades and farming methods have become more efficient. Up until this week's rebound in corn (weekly & daily) and wheat (weekly & daily) price action had been decidedly subdued recently. Soybeans (weekly & daily) have been drifting through initial support within a lengthy ranging phase and rough rice (weekly & daily) has slumped in a decline which is now becoming overextended.

One reason may be this year's favourable conditions to date in North America, although corn plantings were down as I reported yesterday. It is probably worth keeping an eye on charts for the grain and bean complex because corn in particular shows evidence of a developing base formation. However in the 'be careful what you wish for' department, a resurgence of price inflation for these staple foods is one of the last thing the global economy needs at this time.