GRAINS-Soy edges up towards 21-month high as supplies tighten
* Soybeans up for second day as USDA cuts supply outlook
* Strength of soy market helps boost wheat, corn prices (Adds quotes, updates prices)
By Nigel Hunt
LONDON, May 11 (Reuters) - U.S. soybean futures crept up towards the prior session's 21-month high on Wednesday, buoyed by the U.S. government's forecast of lower world supplies.
The Chicago Board of Trade's most-active soybean contract had added 0.4 percent to hit $10.88-1/4 a bushel by 1042 GMT. The market climbed 5.2 percent on Tuesday to its highest since July 2014 at $10.91-1/2 a bushel.
"The immediate catalyst (for the soybean rally) was the USDA's crop report," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.
"The USDA is forecasting that soybean inventories, global and U.S., will sharply decline by the end of season 2016."
World and U.S. soybean supplies will be tighter than expected for the next two years due to reduced harvests in South America and rising global demand, the U.S. Department of Agriculture said.
The agency cut its outlook for Argentine soy production by 2.5 million tonnes following heavy rains that damaged crops in the key exporter. It reduced its estimate for Brazil's harvest by 1 million tonnes. Continuación...