Soy futures recover from June low as rains benefit Brazil crops

CHICAGO, Jan 3 (Reuters) - Chicago Board of Trade soybean futures ended firmer on Wednesday, as the market recovered after favorable rains in Brazilian crop areas sent the market to its lowest levels since June.

Corn futures also finished slightly higher after setting a contract low, while wheat extended losses to a one-month low.

Short covering helped lift CBOT soybeans and corn after their declines, brokers said.

However, rains should continue to benefit crops in northern Brazil this week, forecasters said, after hot, dry weather has prompted analysts to slash production estimates. Brazil is the world's top soybean exporter and competes with the U.S. for business on the global market.

"The better weather in South America and the lack of any new export sales announcements make it difficult to be a buyer in the short run," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

CBOT March soybean futures settled up 3-1/2 cents at $12.77 a bushel after the contract sank earlier to its lowest price since June 28 at $12.65-3/4.

Higher supplies from other South American producers are likely to offset crop losses in Brazil, said Arlan Suderman, chief commodities economist for StoneX.

"Buyers have not yet seen the need to increase imports of U.S. soybeans to compensate for a 'short' Brazil crop," he said.

"Part of the reason for that has been expectations for the Argentine crop to nearly double this year to close to 50 million metric tons, while increased production is also expected in Paraguay and Uruguay."

A two-week high in the dollar also hung over agricultural markets, as it makes U.S. farm products looks less attractive to importers, analysts said.

CBOT March wheat settled down 6-1/2 cents at $6.00-1/4 per bushel hit its lowest price since Dec. 1. March corn ended up 1-1/2 cents at $4.65-1/4 a bushel after setting a contract low of $4.61-3/4. (Reporting by Tom Polansek in Chicago; Additional reporting by Peter Hobson in Canberra and Sybille de La Hamaide in Paris; Editing by Varun H K, Alexandra Hudson and David Evans)