The US soybean stockpile will shrink to less than a three-week supply before this fall's harvest, and voracious demand around the world is also thinning US wheat supply, the government said.

Grain and soy futures prices rose on the Chicago Board of Trade after the US Department of Agriculture released the crop report.

Corn, wheat and soybeans are forecast to sell for record-high prices at the farm gate this marketing year. USDA projected a soybean stockpile of 3.8 million tonnes, which would be the smallest season-ending figure in four years for the versatile oilseed used for food and livestock feed.

The USDA raised its forecast for soybean exports by 20 million bushels to 1.025 billion bushels, 'reflecting strong sales, especially to China,' for the current marketing year.

It pegged wheat exports at 1.225 billion bushels, up 25 million bushels. The wheat carry-out, estimated at 242 million bushels (6.6 million tonnes), would be the smallest in six decades, USDA said. Chicago traders had expected a soy figure of 153 million bushels and wheat at 263 million bushels.

USDA cut its forecast of soyoil for biodiesel to 2.8 billion lbs, down 600 million lbs for the marketing year ending September 30 and equal to use in 2006/07.

Rising soyoil prices discourage its use as a biodiesel feedstock, said USDA. One gallon of biodiesel can be made from 7.5 lbs of soyoil.

Cotton exports were forecast for 14.5 million bales for 2007/08, down 1.2 million bales from last month's estimate, 'due to a combination of lower import demand by China and Turkey and greater competition for market share from India,' USDA said. A bale of cotton weighs 218 kg.

On the CBOT, wheat for delivery in May soared by 60 cents, the maximum allowed in a day, to $12.23 a bushel at mid-morning.

Besides USDA's forecast of smaller US supplies, Argentina limited its exports. May soybeans sold for $14.26 a bushel, up 19-1/2 cents, and May corn was up 10-3/4 cents, to $5.76-1/2 a bushel.-Reuters