* Dry southern Plains forecast after dry winter lifts wheat
* Corn capped by ample supply, China stockpile policy shift
* Soy slips from 3-1/2 month peak ahead of key USDA report (Rewrites throughout, updates prices, changes byline, changes dateline from MANILA))
By Karl Plume
CHICAGO, March 28 (Reuters) - U.S. wheat futures surged more than 2 percent on Monday on technical buying and short covering amid concerns about dry weather in the southern Plains wheat belt.
Corn was narrowly mixed as spillover support from rallying wheat was offset by concerns about abundant global feed grain stocks and a sharp drop in corn futures prices in China, the world’s No. 2 consumer of the grain.
Soybeans hit a 3-1/2 month high but then erased nearly all gains as traders adjusted positions ahead of a government report on spring planting intentions scheduled for release on Thursday.
Chicago Board of Trade May soft red winter wheat rose 12-1/2 cents, or 2.7 percent, to $4.75-1/2 a bushel by 11:15 a.m. CDT (1715 GMT). Buying accelerated as the contract rose above its 50-day moving average around $4.69 a bushel.
May hard red winter wheat was up 11 cents, or 2.3 percent, at $4.82-3/4 a bushel after climbing above its 100-day moving average around $4.79.
Forecasts for continued dry conditions in the southern U.S. Plains sparked short covering in wheat by some investors. A weekly Commodity Futures Trading Commission report showed large speculators expanded their net short position in CBOT wheat to 127,479 contracts in the week ended March 22.
“The 16- to 30-day (forecast) is dry,” said Rich Feltes, vice president of research for RJ O‘Brien.
“It’s favorable for row crop planting but unfavorable for wheat development, especially when you consider we’ve come off of this unusually dry winter for that part of the country.”
CBOT May corn rose 1-1/2 cents, or 0.4 percent, to $3.71-1/2 a bushel, with gains capped by a local Chinese media report that the country will scrap its nine-year old stockpiling scheme from autumn and let the market decide domestic corn prices.
May soybeans added 1 cent, or 0.1 percent, to $9.11-1/2 a bushel after earlier hitting a high of $9.14-3/4, the contract’s loftiest level since early December.
Traders are bracing for the U.S. Agriculture Department’s quarterly U.S. grain stocks and prospective planting reports scheduled for release on Thursday.
Analysts, on average, expect the USDA to report a jump in corn and soybean seedings over last year. The agency is also expected to estimate March 1 U.S. soybean stocks at their highest since 2007 and quarterly corn stocks at their highest since 1987.
Additional reporting by Julie Ingwersen Editing by W Simon