Chicago corn climbed to its third straight gain on Tuesday, boosted by tight cash markets and technical buying, and wheat followed on deepening concerns about dry crop conditions.
Soybeans turned higher after early losses, aided by short-covering and cuts to South American crop forecasts.
Tight corn cash markets, due to limited farmer selling of newly harvested supplies, are guiding futures prices up, said Chris Manns, president of Traders Group Inc. in Chicago.
"I think corn's rallying the whole (grain market). Corn's finally shaking off its slumber a little bit and the world's coming to look to buy our corn because we're more competitive than we have been."
U.S. corn exports are poised to rebound by early 2013 from their worst slump in decades as rival global producers run low on supplies.
Chicago Board of Trade (CBOT) December corn added 0.6 per cent, or 4-1/2 cents, to $7.43-1/4 a bushel, touching its highest price in more than a week (all figures US$).
Bargain buying lifted soybeans, which had crept toward a five-month low.
Chicago January soybeans rose 1.3 per cent, or 18 cents, to $14.12-3/4 a bushel, after dipping as low as $13.80-3/4, just 8-1/2 cents off the low reached on Friday.
"Part of (the soybean rebound) is just the depth to which we fell -- a bounce could be expected," said Arlan Suderman, senior market analyst at Water Street Advisory. "We have red-hot demand, both in the crush and on the export side."
On Monday a temporary halt to regular state soy sales in China alleviated last week's concerns about the cancellation of orders for about 600,000 tonnes of U.S. soybeans by China, the world's top importer of the oilseed.
"The rumoured cancellation the other day is still going to limit the market's ability to move up speculatively," said Bill Biedermann, co-founder and branch manager at Allendale Inc., adding that liquidation by funds also pressured the market.
Reduced soybean crop forecasts for Argentina and Brazil by Hamburg, Germany-based oilseeds analysts Oil World gave the market some momentum.
More showers were expected in 90 per cent of crop areas in already-drenched Argentina. In Brazil, scattered showers are expected in northern growing areas for the next 10 days, which will benefit crops in that region, said Don Keeney, a meteorologist with MDA EarthSat Weather.
CBOT December wheat gained 0.4 per cent, or 3-1/4 cents, to $8.45 a bushel, helped by short-covering.
The U.S. Department of Agriculture said on Monday its rating of the winter wheat crop fell to 34 percent good-to-excellent, below analysts' expectations, due to persistent dry conditions in the U.S. Plains.
The ratings were a record low for November and raised questions about how healthy the crop will be when it emerges from dormancy in the spring.
Little relief is in sight. Some light showers are expected in eastern Kansas, eastern Oklahoma and far eastern Texas on Thursday and Friday, but totals will only range from 1/10 to 1/4 inch at best, Keeney said.
"(It is) not very promising," he said. "It does not look like you are going to get a whole lot of rain for the next 15 days. It is very, very dry there."
The wheat harvest in Australia, the world's second-largest exporter, is in full swing, with farmers reporting lower protein scales and poor yields.
-- Rod Nickel writes for Reuters from Winnipeg. Additional reporting for Reuters by Mark Weinraub in Chicago.