U.S. wheat rebounded on Friday from a six-month low hit a day earlier, as government data showed the biggest weekly export sales in nearly two years.
Soybeans and corn rose more modestly after the U.S. Department of Agriculture's weekly export data revealed sales below trade expectations for those crops.
U.S. wheat exports totaled more than one million tonnes, the highest level since January 2011, and easily exceeded a range of trade estimates between 500,000 and 700,000 tonnes.
The robust wheat sales were due to U.S. supplies being priced at a discount to competitors' wheat after values dropped steadily this month, said Terry Reilly, senior commodity analyst at Futures International in Chicago.
"This is the beginning. The U.S. is a pretty good shop for global importers to look to," he said. "Ukraine and Russian wheat exports have considerably slowed during December, but more importantly U.S. prices are now fairly competitive."
Chicago Board of Trade (CBOT) March wheat rose 6-1/2 cents, or 0.8 per cent, to $7.78-3/4 a bushel with help from short-covering (all figures US$).
"It's not the sales themselves. It is an indication that U.S. wheat is the cheapest in the world, and I think that's what the market is reacting to," said Roy Huckabay, executive vice-president of The Linn Group.
Egypt, the world's top wheat importer, was the biggest buyer with 405,000 tonnes of U.S. supplies.
Despite Friday's gain, March wheat dropped 1.7 per cent this week for its fifth straight weekly decline. This would bring its slide for the month to nearly eight per cent, the contract's biggest decline in more than a year.
The strong export sales will help wheat prices rebound somewhat for the end of the year, said Ken Ball, a commodities broker at PI Financial Corp. in Winnipeg.
"The wheat market has been plastered pretty hard on liquidation. So many people got heavily long and then had to run for cover, but now with a good week (of sales) like that, anybody that's short is not going to leave all that money on the table."
U.S. export sales were disappointing for corn and soybeans. Net soybean sales amounted to 87,000 tonnes, below a range of trade expectations from 100,000 to 300,000 tonnes. That miss was tempered as USDA separately reported a sale of 165,000 tonnes of U.S. soybeans to China.
"Individual sales announcements this week and this morning, while not huge, still keep the bean numbers looking solid," Ball said.
Net corn sales totaled 104,300 tonnes, down from a trade estimate range of 150,000 to 300,000 tonnes.
January soybeans gained 5-1/4 cents, or 0.4 per cent, at $14.24 per bushel, helped by technical buying.
March corn added 2-1/2 cents, or 0.4 per cent, at $6.94 a bushel on spillover support from wheat. Nearby soybeans and corn are down 0.5 and 1.1 per cent respectively for the week, with corn's drop the fourth in a row.
Despite tracking large quarterly losses, Chicago wheat and soybeans are on course to finish with yearly gains of 19 and 18 per cent respectively, making them the top performers among the 19 commodities in the Thomson Reuters Jefferies CRB index.
Corn is heading toward its fourth straight yearly gain, of seven per cent, with one last trading session on Monday for 2012.
The market is also watching weather patterns.
Cold temperatures hit southern U.S. Plains hard red winter wheat regions this week, raising the threat of crop damage from winterkill. The U.S. crop quality hit a record November low following the worst drought in 56 years.
However, prospects for the South American soybean crop look increasingly bright, with Argentina's soy crop in mostly good or excellent condition in the central Pampas farm belt, while welcome rains were forecast later this week and next for parts of central Brazil.
Harvesting of what is expected to be a record-large soybean crop has started in Brazil's top soy-producing state of Mato Grosso.
Investors were closely watching for progress in U.S. budget negotiations, with a year-end deadline approaching on Monday before a wave of tax increases and spending cuts automatically kicks into place. Equities weakened ahead of a meeting scheduled for Friday afternoon between President Barack Obama and Democratic and Republican lawmakers.
-- Rod Nickel writes for Reuters from Winnipeg. Additional reporting for Reuters by Julie Ingwersen in Chicago, Ivana Sekularac in Amsterdam and Colin Packham in Sydney.