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Wheat Holds Near 4-Week Top as Market Weighs Cold Risk

By Gus Trompiz and Colin Packham

PARIS/SYDNEY, Jan 3 (Reuters) - Chicago wheat futures rose for a second day on Wednesday, holding near a four-week high touched in the previous session, as the market assessed the risk of crop damage from severe cold in U.S. growing regions this week.

Soybeans edged higher for a third straight session as concerns about production in Argentina lent support, while corn also rose marginally. The most active wheat futures on the Chicago Board Of Trade were up 0.5 percent at $4.35-1/2 a bushel by 1303 GMT, close to Tuesday's high of $4.36-1/4 a bushel - a level not seen since Dec. 5.

Extreme cold in parts of the U.S. Plains and Midwest at the start of the week led some crop watchers to point to potential losses, including in the top wheat growing state of Kansas.

However, some analysts and traders said it was too early to predict the extent of weather damage.

"Thanks to some short-covering from financial funds in Chicago caused by risks of winter kill on U.S. winter wheat, wheat prices are resisting," consultancy Agritel said in a note.

"The return to higher temperatures in coming days should temper the rising potential of the market."

Investments funds were net buyers of CBOT wheat, corn and soybean futures contracts on Tuesday, according to trade sources.

Weather risks, which also include persisting dryness in the U.S. Plains, have taken attention away from a backdrop of high world supply of wheat and stiff export competition.

Export inspections of wheat during Dec. 21-28 totalled 274,506 tonnes, the U.S. Department of Agriculture (USDA) said on Tuesday, below trade estimates of 300,000 to 600,000 tonnes.

Corn and soybean export volumes were in line with market expectations.

Analysts said soybeans continue to draw support amid concerns about dry weather in Argentina, the world's third-largest exporter of the oilseed.

Argentina's bread-basket province of Buenos Aires will remain mostly dry in the days ahead, meteorologists said on Tuesday, after reporting scant rains over the weekend.

The most active CBOT soybean futures were up 0.5 percent at $9.69-1/4 a bushel. Corn added 0.3 percent to $3.54-1/4 a bushel, as it continued to track gains in soybeans and wheat.

Firm crude oil prices also lent support to the crops, which are used in making biofuels, although a bounce in the dollar curbed recent impetus from a weaker U.S. currency. 

(Reporting by Colin Packham and Gus Trompiz; Editing by Christian Schmollinger and David Evans)

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