GRAINS-Soy, wheat, corn set for second annual drop despite late gains

Updates at 1202 GMT, changes dateline

PARIS/SINGAPORE, Dec 31 (Reuters) - Chicago soybean, wheat and corn futures were set for second straight annual declines on Tuesday as world supplies remained ample, though weather concerns helped prices regain some ground at the year's end.

Forecasts of dry conditions for corn and soy crops in Argentina as well as poor early growth for Russian wheat could underpin grain markets in early 2025, but expectations of record soybean output in top supplier Brazil are likely to keep a lid on prices of the oilseeds.

Trade flows are another question mark for grains, as they do for wider markets next year, with Donald Trump's return to the White House poised to generate new tariffs and top wheat exporter Russia seeking to curb shipments.

Soybean, wheat and corn edged higher on Tuesday in light holiday trading, supported by an easing of the dollar index =USD.

By 1202 GMT, the most active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 0.5% at $9.96-1/2 a bushel, wheat Wv1 0.5% higher at $5.50-3/4 a bushel and corn Cv1 0.6% up at $4.54-3/4 a bushel.

Over the year, the soybean benchmark was down 23%, wheat 12% lower and corn 3.5% off.

All three crops hit their lowest levels since 2020 over the course of this year, with soybeans returning to that trough in mid-December as beneficial rain increased prospects of a record Brazilian harvest in early 2025.

But an unfavourable weather outlook in Argentina, a major exporter of corn and soybean byproducts, has tempered optimism about South American supply.

Brisk U.S. export demand, partly due to buyers in countries like China anticipating tariffs during Trump's upcoming term, has also put a floor under prices.

On Monday, corn struck a six-month peak, soybeans a one-month high and wheat a two-week top.

"Funds have bought grains and oilseeds over the past week due to Argentina's warm and dry near-term forecasts," Peak Trading Research said in a note.

"Looking forward, traders are watching South American weather forecasts and U.S. cash (market) signals ahead of next week's index rebalance, (U.S.) job numbers, and the January USDA (world crop) report," it said.

The U.S. Department of Agriculture's monthly world outlook on Jan. 10 will include updated estimates of the U.S. harvest and new projections of subsequent South American crops.

On the wheat market, a difficult start to the growing season in Russia has added to uncertainty over dwindling supply, after heavy export flows this year.

The state of winter wheat crops will worsen in Russia's Central and Volga areas in January, the state weather agency said on Saturday.

(Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Varun H K, Sumana Nandy and Vijay Kishore)

((gus.trompiz@thomsonreuters.com))