U.S. soybean futures jumped more than one per cent on Friday while corn fell early and then trimmed losses as tight domestic supplies and strong cash markets prompted investors to cover short positions.
Other financial markets also supported agriculture futures. Crude oil rose sharply and the Thomson Reuters-Jefferies index of 19 commodities hit a three-week high in the wake of a better-than-expected U.S. jobs report.
"Soybeans are leading the charge and cash is leading the futures," said Karl Setzer, grains analyst at MaxYield Cooperative in West Bend, Iowa.
Investors were betting that the U.S. Agriculture Department in a monthly supply-and-demand report due in a week would reduce ending stocks estimates in soybeans, Setzer said.
"We've already met our (export) sales forecast for the year. Granted we've seen negative bookings on old-crop, but our crush pace is not slowing down," he said.
USDA in March said quarterly stockpiles of soybeans and corn were the smallest in nine years. Domestic users of the commodities -- soy crushers, ethanol plants and corn sweetener makers -- are bidding for the commodities at the highest levels ever for this time of year.
Foreign buyers are turning to bumper harvests in South America, and cancelling some deals with the U.S. But demand inside the U.S. remains robust.
Benchmark soybean futures for July delivery rose 15 cents to $13.87-1/4 per bushel, rebounding from steep declines earlier this week and posting a narrow weekly gain (all figures US$).
"The bean basis is just too tight, the farmer isn't selling and won't be selling for a while. We're just in that timeframe of tight stocks and there haven't been any imports yet from South America," said Don Roose, president of U.S. Commodities in Des Moines, Iowa.
Most-active July corn futures settled 3/4 cent lower at $6.61-1/4 per bushel after falling as low as $6.57-3/4. Front-month futures gained 8.6 percent for the week in the best performance since last summer's drought.
Speculative investors last week had their largest bearish, or short, bet on the corn market in three years on expectations for the most corn plantings since 1933. But with the delayed plantings, investors were forced to cover their bearish stake in the market.
Wet and chilly weather into the weekend will continue to slow plantings of the U.S. corn crop that already has fallen to the slowest seeding pace on record, an agricultural meteorologist said.
Warmer weather next week is forecast in the southern U.S. Plains wheat belt.
An annual crop tour in top wheat-growing state Kansas on Thursday projected wheat production in the state 18 per cent lower than a year ago but yields were higher than forecasts in a Reuters poll of analysts ahead of the tour.
"Next week, we're seeing a big system and there's a really good shot of getting a lot of rain into Texas, Oklahoma and Kansas. A soaking rain for this crop that has been stressed right when we're going into heading would be really beneficial," said Austin Damiani, analyst at Frontier Futures in Minnesota.
CBOT July wheat ended 7-1/2 cents lower at $7.21 per bushel, a decline of one per cent. But wheat prices rose 4.7 per cent for the week, the largest weekly gain since mid-March.
-- Michael Hirtzer covers ag commodity markets for Reuters in Chicago. Additional reporting for Reuters by Sam Nelson in Chicago, Sybille de La Hamaide and Valerie Parent in Paris and Naveen Thukral in Singapore.