The market is "very, very oversold, you're down pretty hard for the week, so you've got some bargain hunters coming in," said Jerrod Kitt, director of market information at The Linn Group in Chicago. "The break is starting to stimulate some foreign demand." Grains advanced despite bearish outside markets, with equities and crude oil sliding after a setback on Thursday in talks to avert a US fiscal crisis.
"It's impressive that we're so resilient in the face of weakness in the macro markets," said Arlan Suderman, senior market analyst at Water Street Advisory in Illinois. Nearby corn and soyabeans failed to test key support levels during their steep drops this week, triggering a technical bounce, in addition to bargain-hunting, Suderman said.
Funds may have wrapped up much of their year-end liquidation of positions, and corn and soyabeans typically pick up strength around the holidays, said Terry Reilly, senior commodity analyst at Futures International. "There's little left of the sellers so the buyers come back in and they can afford it," he said.
Chicago Board Of Trade January soyabeans rose 20-3/4 cents or 1.5 percent to $14.29-1/2 a bushel at 11:35 am CST (1735 GMT), after sliding more than 2 percent on Thursday. Soyabeans are down 4.4 percent for the week. Soyabeans came under sustained pressure this week because of signs of softer demand from China, the world's largest consumer of the oilseed.
There were no fresh cancellations of Chinese purchases on Friday, although the US Department of Agriculture said that a 110,000-tonne soyabean sale reported as export business to unknown destinations on Tuesday, was actually a domestic sale. On Thursday, private exporters reported the cancellation of 540,000 tonnes of US soyabeans sold to China - the biggest cancellation by the world's top importer of the oilseed in at least 14 years.
Traders said the cancellations were due to a likely bumper crop in Brazil, the world's second-largest soyabean exporter, where China could book supplies at much lower prices. Heavy rains have fallen over Brazil's southern grain producing states this week, meteorologist Somar said on Friday, as some analysts raised their views for what is expected to be a record soyabean crop.
Brazil's government food supply agency Conab forecast the soyabean crop at a record 82.6 million tonnes. March corn rose 3-3/4 cents or 0.5 percent to $7.00-1/4 a bushel. Corn is down about 2.6 percent for the week, which would be its third straight weekly loss.
Corn drew some support from continued concerns over South American production. Corn slumped this week under pressure from weaker demand, while a forecast for the biggest US corn acreage since 1936 from closely watched private analytics firm Informa Economics also dragged on prices.
March wheat edged up 3-3/4 cents or 0.5 percent at $7.94-1/4 a bushel, having closed down 1.8 percent on Thursday. Wheat is down 0.8 percent for the week, the third consecutive week of losses. Wheat is underpinned by drought threatening the US winter wheat crop. The first major snow storm of winter did little to ease the drought, which is the worst in more than 50 years in the crop-growing US Central Plains and Midwest.
Argentina's Agriculture Ministry on Thursday cut its estimate for 2012/13 wheat production by 5 percent to 10.5 million tonnes, which is still higher than leading private forecasts but reflects damage caused by wet weather.