U.S. grain and soybean futures ended a three-day slide on Friday as better-than expected U.S. jobs data helped markets recover their appetite for risk.
Agricultural markets felt spillover support from strong gains in crude oil and equities, with a weak dollar helping to feed the bull market sentiment. The dollar fell to a one-month low against the euro after the release of the U.S. employment report for July, making dollar-denominated commodities cheaper for foreign buyers.
"The biggest driver today is the outside market influence," said Dax Wedemeyer, a broker for U.S. Commodities. "There is spillover buying in the grain markets heading into the weekend."
Wheat felt an additional push from speculation dry weather in Russia could lead to export restrictions in the Black Sea producer. Russia, a major wheat exporter, shocked traders in 2010 by banning grain exports due to a severe drought.
Chicago Board of Trade new-crop December corn rose 9-1/2 cents, or 1.2 per cent, to $8.05-1/4 per bushel by 11:15 a.m. EDT (1615 GMT), while actively traded November soy gained 11-1/2 cents, or 0.7 per cent, to $16.28. September wheat climbed 28 cents, or 3.2 per cent, to $8.93 per bushel.
Private crop forecasters helped push up prices with projections for corn and soy harvests that were well below government estimates.
Prices had pulled back over the past three days in a retreat from record highs reached last month on increasing concerns about the worst drought in 50 years hurting U.S. output.
Analytics firm Informa Economics on Friday predicted the U.S. Department of Agriculture, in a monthly crop report Aug. 10, will estimate the U.S. corn crop at 10.338 billion bushels, traders said. That was down from Informa's previous forecast of 11.5 billion and below the USDA's latest estimate of 12.97 billion bushels.
Informa projected final U.S. 2012 corn production at 11.224 billion bushels, traders said. A Farm Futures Magazine survey was sharply lower, with a crop forecast of 9.57 billion bushels.
The markets were "showing some renewed vigor on supportive private-sector forecasts," said Rich Feltes, senior vice president of research for R.J. O'Brien.
Some expect the USDA next week will slash its estimate of the number of acres of corn that will be harvested due to severe damage from the drought, which covers about two-thirds of the contiguous United States.
"There are concerns that yields are going to be down, so people don't want to be short ahead of the USDA report," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore.
"Even if there is profit-taking, the downside is going to be limited." The drought-hit U.S. Midwest is feeling a little relief, as storms in the last day brought much-needed rain to parched corn and soybean crops in eastern areas and more was forecast through the weekend, an agricultural meteorologist said.
The moisture arrived too late to offer much help to corn crops in the area but should give a boost to soybeans, which are in their key pod-setting phase. In Russia, forecasters pointed to hot and dry weather dominating in August, which could further diminish crop prospects.
Investment bank Goldman Sachs said it saw growing upside risks to wheat prices in the coming months due to continued dry weather in countries such as Argentina, India, Australia and the former Soviet Union.