Chicago soybean futures rose to their highest level in more than three months on Monday with demand for U.S. soy buoyed by concerns over supplies from drought-hit South America.
Wheat prices edged higher but corn slipped , with the market's focus this week on a key crop report to be issued by the U.S. Department of Agriculture on Thursday.
China is likely to buy more U.S. soybeans this quarter, as a withering drought is expected to cut the South American harvest, pushing soy prices up to fresh highs.
"We're a little more competitive now when you look at price and exchange rates and we're seeing more of those private estimates dropping for South American soybean production," said Arlan Suderman, market analyst at Farm Futures magazine.
"We need to see harder confirmation of the export business to China but traders are pretty quick to get excited just on the thought and the possibility."
Chicago Board of Trade March soy rose 0.5 percent or 6 cents to $12.38-1/2 a bushel by 9:50 a.m. CST (1550 GMT) after peaking in European trading at $12.42, the highest level for the front month since late October 2011 . Soybeans have settled higher in four straight sessions.
Argentina's 2011/12 soy harvest will be at least 47 million tonnes, a government source said on Monday, while a Reuters poll showed analysts expect production of 45 million to
50 million tonnes.
Closely watched analytics firm Informa Economics lowered its forecast on Friday for soy production in Argentina and Brazil.