GRAINS-Corn holds at 16-month high while soybeans also firm

Updates at 1229 GMT, changes byline/dateline

PARIS/CANBERRA, Feb 19 (Reuters) - Chicago corn futures edged up on Wednesday to equal the previous day's 16-month high, with strong U.S. export demand bolstering expectations of tightening inventories.

Soybeans also firmed, tracking corn, with strong demand indicated by a high volume of U.S. soybean crushing last month.

Wheat drifted lower after a three-day rally, with traders waiting to discover whether cold weather in Russia and the U.S. will damage crops and curtail supply.

Small movements in grains were in step with broader financial markets as investors assess the latest tariff anouncement from U.S. President Donald Trump and monitor his moves to negotiate an end to the war in Ukraine. MKTS/GLOB

The most active corn contract on the Chicago Board of Trade (CBOT) Cv1 was up 0.4% at $5.04 a bushel by 1229 GMT after equalling Tuesday's peak of $5.04-1/4.

"This upward movement (is) largely supported by significant export activity still observed from the U.S.," Argus analysts said of corn.

The U.S. Department of Agriculture (USDA) on Tuesday said that 1.6 million metric tons of U.S. corn were inspected for export last week. That was more than expected and continued a strong run of U.S. sales that is forecast to draw on U.S. inventories.

Tightening U.S. stocks have been accompanied by doubts over South American harvest prospects.

Dry weather is damaging corn crops in Argentina and a behind-schedule sowing programme could curtail output in Brazil, said Rabobank analyst Vitor Pistoia, predicting that prices will continue to drift higher.

Many U.S. farmers are unable to make money from corn at below $5 a bushel and higher prices are needed to encourage planting, he added.

CBOT wheat Wv1 was down a marginal 0.04% at $6.17-1/2 a bushel while CBOT soybeans Sv1 added 0.36% to $10.42-1/4 a bushel.

Concern over possible crop damage from severe frosts in U.S. and Russian winter wheat areas had added to background support from rising prices and slowing exports in Russia.

The head of analysis at Russian shipper Rusagrotrans said that Russian exporters would be able to deliver no more than 8.1 million tons of wheat by the end of the 2024-25 season, well below their permitted quota.