29/06/2011 (Bloomberg) - Prices for most grains and oilseeds are probably near “the bottom,” according to Hamburg-based analyst Oil World.

Corn and rapeseed have bullish fundamentals, Oil World said today in a weekly report, adding that buyers are beginning to take advantage of low corn prices. Soybean price weakness may also be shortlived if hot and dry weather forecast for the U.S. Midwest in July leads to “crop-scare rallies,” the analyst added. Corn futures touched a three-month low of $6.20 a bushel on June 23. Soybean futures declined the past three weeks.

The canola, or rapeseed, harvest in Canada may come in below forecasts of 8 million hectares (19.8 million acres) made at the end of March before severe flooding hit plantings, Oil World said. Rapeseed in the European Union only partially benefited from rainfall this month and wet weather forecast for Ukraine may damage the crop there, the analyst said.

“Overall, the European rapeseed sector will have to cope with short supplies in 2011-12 and this will probably soon be reflected in a price recovery,” Oil World said.

Demand for palm oil is rising as buyers prepare for the Muslim fasting month of Ramadan, which starts around the beginning of August, Oil World said. Supplies are tight in Indonesia and import demand in India is expected to grow in the near- to medium-term due to depleted stocks and declining production.

Speculators reduced their net-long position in 11 U.S. farm goods by 12 percent to 674,396 futures and options contracts in the week ended June 21, according to data from the Commodity Futures Trading Commission compiled by Bloomberg. That’s the biggest drop since mid-March.