GRAINS-Chicago soy, grain futures rise but look set for second annual drop

Updates with U.S. market open

By Renee Hickman

CHICAGO, Dec 31 (Reuters) - Chicago soybean and corn futures rallied on Tuesday on short-covering and concerns over dry weather conditions in South America, market analysts said.

But soybean, corn and wheat futures all were set to mark an annual price decline for a second consecutive year, as global supplies remain ample and trade relations remain uneasy between the U.S. and key export market China, analysts said.

By 11:58 a.m. CST (1558 GMT), the most active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 12-1/4 cents at $10.04 a bushel, and corn Cv1 was up 5-1/2 cents at $4.57-3/4 a bushel.

But for the year, CBOT's soybean benchmark contract was down around 23%, and corn about 3%.

CBOT wheat futures traded either side of unchanged. Most active wheat futures Wv1 were up 3/4 cent at $5.49 per bushel on Tuesday and down 13% for the year.

All three crops hit near 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 a spate of dry weather in Argentina fueled the jump in prices on New Year's Eve, said Randy Place, analyst with Hightower Report, as one of the world's largest corn and soy producers saw its crops threatened by more hot, dry conditions over the coming weeks.

News in wheat-growing areas of the Black Sea was more subdued, said Place, although Russia's state weather agency forecast earlier in the week poor conditions threatening the development of the wheat crop in the Central and Volga regions.

Very cold temperatures forecast for the Northern U.S. Plains in the coming weeks could also threaten wheat crops there, said Place.

"This hasn't been a good year in any of the markets," said Place, but 2025 might be better, he said, with prices so low that there is little downside left.

And with U.S. President-elect Donald Trump's inauguration just around the corner, uncertainty remains about how possible tariff hikes on multiple countries will impact trade.

"Everybody's just trying to figure it out on their own," said Place.

(Reporting by Renee Hickman in Chicago; Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Richard Chang)

((renee.hickman@thomsonreuters.com))