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Soybeans follow crude oil; Midwest crop weather

uncertainty

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Soyoil pauses after sharp two-day rally

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Wheat higher on slow US winter wheat harvest,

short-covering

(Updates with closing U.S. prices)

By Julie Ingwersen

CHICAGO, June 17 (Reuters) - Chicago Board of Trade

soybean futures closed higher on Tuesday, supported by rising

crude oil prices and uncertainty about Midwest crop weather in

the weeks ahead, while soyoil prices eased following a sharp

two-day rally tied to stronger U.S. biofuel blending mandates.

CBOT wheat hit a one-week high as a slow start to the U.S.

winter wheat harvest allowed speculators to cover short

positions, analysts said. Corn futures were mostly higher,

following wheat and crude oil, but the front July contract

ended lower.

CBOT July soybeans settled up 4-1/4 cents at

$10.74 per bushel, while July soyoil was down 0.32 cent

at 54.79 cents per pound, retreating from early strength. July

wheat finished up 12-1/2 cents at $5.49 a bushel.

CBOT July corn settled down 3-1/4 cents at

$4.31-1/2 a bushel, but new-crop December corn closed up

3-3/4 cents at $4.38-1/4 a bushel.

Strength in energy markets supported corn and soybeans,

given the crops' role in the production of biofuels. U.S. crude

oil prices climbed 4% as the Iran-Israel conflict raged with no

end in sight, though major oil and gas infrastructure and flows

have so far been spared from substantial impact.

"The Middle East situation is continuing to cause

disruptions in the outside markets, which are spilling over into

our markets," said Terry Reilly, senior agricultural strategist

for Marex.

Soybean futures drew support after the U.S. Department of

Agriculture on Monday rated 66% of the U.S. soy crop as

good-to-excellent, down from 68% last week, while corn ratings

improved to 72% good-to-excellent, up 1 percentage point. Summer

weather is becoming increasingly important to crop prospects,

analysts noted.

"For this time of year, we have taken enough risk premium

out, until we get a better look at the weather as we get past

the Fourth of July," said Don Roose, president of Iowa-based

U.S. Commodities.

Wheat futures rallied, supported in part by the USDA's report

that the winter wheat harvest was 10% complete, behind the

five-year average of 16%.

"With the harvest behind, and too-wet conditions, it's

giving the wheat market a bounce," Roose said, noting that

commodity funds hold a large net short position in CBOT wheat

futures, leaving the market prone to short-covering rallies.

In France, the Farm Ministry on Tuesday forecast a strong

rebound of the country's 2025 winter barley and rapeseed

production from rain-hit crops last season.