GRAINS-Soybeans extend gains with crude oil as war worries grow

By Naveen Thukral and Gus Trompiz

SINGAPORE/PARIS, March 6 (Reuters) - Chicago soybeans rose on Friday to their highest since June 2024, tracking further gains in crude oil prices as investors continued to react to potential disruption from the U.S.-Israeli war with Iran.

Wheat rose sharply to approach a one-year high, with fear about an escalating Middle East conflict fuelling short-covering ahead of the weekend. Corn was also higher.

Comments by Qatar's energy minister, who said if the war continues he expects all Gulf energy producers to shut down exports within weeks and drive oil prices to $150 a barrel, further unsettled investors.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 0.8% at $11.89 a bushel by 1233 GMT, after earlier setting its highest since June 2024 at $11.92-1/2.

Crude oil rose to its highest since July 2024. O/R

Grain markets can track movements in crude oil, partly due to investment flows from commodity funds and also because crops like soybeans and corn are widely used for making biofuel.

"This is mainly an oil and war-driven rally in prices," said a trader in Singapore. "We have big (soybean) supplies coming from South America, so there is no supply shortage."

Brazil's farmers are in the middle of harvesting what is widely forecast to be a record crop that could slow Chinese demand for U.S. soybeans.

CBOT wheat Wv1 climbed 2.9% to $6.00-3/4 a bushel, near a one-year peak struck on Monday. CBOT corn Cv1 gained 0.9% to $4.57-3/4 a bushel after earlier touching a new nine-month high.

The Middle East conflict has taken attention away from beneficial rain in some U.S. winter wheat belts, which could help bolster already comfortable global supply.

The war has also offset strength in the dollar =USD, which tends to curb Chicago prices as it makes U.S. crops more expensive for export. FRX/