CBOT soybean, corn touch two-week highs on short-covering, weather

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Traders weigh reports of plant stress in western Corn Belt

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Wheat firms early in session, then turns lower

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Market participants seek short-covering, eye US weather outlook

(Updates paragraphs 1-5 with market close)

By P.J. Huffstutter

CHICAGO, July 23 (Reuters) - The price rally in Chicago Board of Trade (CBOT) corn futures extended into a second day on Tuesday, with the most-active contract reaching a two-week high, as traders began to focus on weather-related impacts on the U.S. crop and short-covering, market analysts said.

CBOT soybean futures also touched two-week highs during the session and mostly ended higher, though the August contract closed lower as the rally sputtered late in the day, traders said.

The most-active CBOT soybean contract settled up 6-3/4 cents at $10.75-1/2 a bushel. CBOT corn ended up 2-1/4 cents at $4.17-1/4 a bushel.

CBOT wheat futures briefly turned higher during a range-bound session, as hot and dry weather forecast for parts of Canada and the Black Sea region, along with poor harvest prospects in France lent support.

Wheat futures, however, ended the day lower on global supply pressure, analysts said. CBOT wheat closed down 5-1/4 cents to $5.42-3/4 a bushel.

On Monday, U.S. exporters sold 200,000 metric tons of corn to unknown destinations for delivery in the 2024/25 marketing year, the U.S. Department of Agriculture reported.

Large short positions built up during recent and sharp price drops in soybeans and grains have also left futures prone to rallies, market analysts said.

"The market got oversold," said Jack Scoville, analyst for The Price Futures Group, Inc. "The open positions are still pretty hefty, and I think they're going to have to reduce those levels."

Traders also are paying attention to reports from the western U.S. Corn Belt where fields are showing signs of plant stress, due to excessive rainfall during the spring and early summer.

"There are more and more questions about the quality of the crop out there," said Karl Setzer, partner at Consus Ag. "We're hearing reports of yellowing corn from fields being too wet, leaching out nutrients."

After the market closed on Monday, USDA reported that 67% of the U.S. corn crop was in good-to-excellent condition, down one point from a week ago but still the highest for the time of year since 2020. (Additional reporting by Gus Trompiz in Paris and Peter Hobson in Canberra; Editing by Marguerita Choy)