GRAINS-Soy up as weather spurs short-covering; corn to 6-month top

Updates with closing U.S. prices; fire at Illinois soy plant

By Julie Ingwersen

CHICAGO, Dec 26 (Reuters) - U.S. soybean futures rose more than 1% on Thursday and soymeal futures touched a two-month high as worries about dry weather in parts of Argentina prompted speculators to exit short positions ahead of the new year, analysts said.

Wheat futures climbed after a massive wheat purchase by Algeria's state grains agency, and corn futures notched a six-month top. Trade was light following Wednesday's Christmas holiday.

Chicago Board of Trade (CBOT) March soybean futures SH25 settled up 16 cents, or 1.6%, at $9.97-1/4 per bushel and CBOT March soymeal SMH25 ended up $13.30, or 4.4%, at $314.90 per short ton after reaching $315.40, its highest level since Oct. 24.

CBOT March wheat WH25 settled up 6-1/4 cents at $5.41 a bushel. March corn CH25 ended up 5-1/4 cents, or 1.2%, at $4.53-3/4 per bushel after hitting $4.54-1/4, the highest on a continuous chart of the most-active contract Cv1 since mid-June.

Soymeal posted the biggest percentage advance. Commodity funds held a record-large net short position in soymeal futures as of mid-December, leaving the market prone to short-covering rallies ahead of the year's end.

Outlooks for stressful dry weather for crops in Argentina, the world's biggest exporter of soymeal and soyoil, lent support.

"They are looking at two weeks of dryness," said Tom Fritz, a partner at Chicago-based EFG Group. "It's a excuse for year-end profit taking," Fritz said.

Additional support stemmed from news of a fire that temporarily shut a Bunge Global soybean processing plant in Cairo, Illinois, raising fears of possible supply disruptions.

Wheat climbed on export news. Algeria's state grains agency OAIC is believed to have purchased a massive 1.17 million metric tons of milling wheat in an international tender this week, European traders said.

Also, Russia's IKAR agricultural consultancy projected 2025/26 wheat exports from the world's top supplier of the food grain at 41 million metric tons, down from 43.5 million tons expected in the current season.

CBOT corn futures hit multi-month highs on spillover strength and expectations that the U.S. Department of Agriculture may further trim its forecast of U.S. corn inventories in its next monthly supply/demand report on Jan. 10, following a sizable cut in its Dec. 10 report.

Meanwhile, the USDA is slated to issue weekly U.S. grain and soy export sales data on Friday, one day later than usual due to the Christmas holiday.

(Reporting by Julie Ingwersen; Editing by Stephen Coates)

((Julie.ingwersen@thomsonreuters.com; 1-313-484-5283; Reuters Messaging: julie.ingwersen.thomsonreuters.com@reuters.net))