The USDA will release its updated supply and demand and crop production reports on Wednesday.
The market is expecting the USDA report to show an upward revision to its soybean crop estimate, amid speculation some late-season rainfall across parts of the U.S. farm belt aided the crop.
The report was also expected to show a slight downward revision in U.S. corn supplies, as crop damage from severe drought conditions was seen as irreversible.
On the Chicago Mercantile Exchange, corn futures for December delivery traded at USD7.8788 a bushel, adding 0.6%. The December contract was stuck in a tight trading range of USD7.8162 a bushel, the daily low and a session high of USD7.8838 a bushel.
Prices slumped to a three-week low of USD7.8137 a bushel on Monday.
The USDA’s weekly crop progress report released after Monday’s closing bell showed that 15% of the U.S. corn crop was harvested as of September 9, up from 10% the preceding week and higher than the 5% recorded in the same week a year earlier.
Only 22% of the U.S. corn crop was rated in ‘good’ to excellent’ condition as of last week, unchanged from the previous week and below the 53% recorded in the same week a year earlier.
The share of the U.S. corn crop that was rated ‘poor’ to ‘very poor’ held steady at 52% last week.
The U.S. produced 38% of the world's corn last year, making it the both world's largest corn producing nation and the largest exporter of the grain.
Front-month prices touched an all-time high of USD8.4237 a bushel on August 10, as escalating concerns over the impact of the worst drought in at least 56 years in the U.S. Midwest and Great Plains-region drove prices higher.
Meanwhile, soybeans futures for November delivery traded at USD17.1788 a bushel, easing down 0.05%. The November contract fell to a session low of USD17.1100 a bushel earlier, the weakest level since August 28.
The USDA said that 32% of the soybean crop was rated ‘good’ to ‘excellent’ as of last week, compared to 30% a week earlier.
Prices came under pressure after updated weather models predicted beneficial rains in the drought-stricken U.S. Midwest crop region later in the week.
The November contract rallied to an all-time high of USD17.8888 a bushel on September 4, as the same hot, dry weather that boosted corn buoyed soy futures as well. Soybeans are grown in many of the same regions across the U.S. as corn.
Elsewhere, wheat for December delivery traded at USD8.9175 a bushel, gaining 0.3%. The December contract traded in a narrow range of USD883.88 a bushel, the daily low and a session high of USD8.9288 a bushel..
Wheat futures have been well supported in recent sessions, amid growing speculation Russia will implement a limit on grain exports, despite comments last week from Deputy Prime Minister Arkady Dvorkovich saying the country will not curb grain shipments even if its exportable surplus is exhausted.
In 2010, Russia barred grain exports amid a severe drought, prompting global buyers to turn to U.S. supplies.
Russia is a major wheat exporter and competes with the U.S. for business on the global market. A disruption to exports from the country could boost demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter.
Growing fears over dry weather conditions in Western Australia, the largest wheat producing state in Australia, further supported gains.
The nation cut its forecast for wheat production in the 2012-13 marketing season to 22.5 million tonnes, down 7% from an earlier estimate.
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