U.S. soybeans rose nearly 2 percent on Wednesday after their biggest two-day selloff in seven weeks, and corn and wheat also climbed on buying interest at lower prices.
Soybeans had fallen sharply this week on expectations crop yields across the drought-stricken U.S. Midwest will exceed forecasts as harvesting achieves a record pace.
But there is still doubt whether even a larger-than-expected U.S. soybean crop will be enough to meet high world demand up to the new South American soy harvests in early 2013, causing a sharp drawdown of inventories.
"There was an awful lot of talk last week about how much demand we had killed" because of high prices and tight supplies, said Roy Huckabay, who oversees market research of commodities at the Linn Group. "What's happened here is the (prices) have broken and you've given the uncovered users a chance to extend coverage again."
Farmers have also slowed selling on the cash market after the price plunge, keeping commercial hedge pressure light on the futures, said Dale Durchholz, senior market analyst at AgriVisor LLC.
The market has also seen some end-user buying interest from Asia, and is bouncing in response to the sharp pull-back earlier in the week, he said.
Grains garnered further support after Bank of Japan became the latest leading central bank to take aggressive measures to stimulate its economy, said Mike Zuzolo, president of Global Commodity Analytics.
"I think that came away with a risk-on attitude," he said.
Chicago Board of Trade November soybeans rose 1.8 percent or 29-1/2 cents to $16.69-1/2 a bushel, having closed on Tuesday down 1.7 percent for a loss of nearly 6 percent over two days.
"The rise in soybeans is (caused by) consumers trying to pick the bottom following two days of losses," said Victor Thianpiriya, agricultural strategist at the bank ANZ. "Soybean fundamentals remain tight, but given the steep falls in the last two days, it's not surprising to see a little bit of buying."
A Reuters poll of 14 analysts on Tuesday put the soybean yield at 35.85 bushels per acre, up 1.6 percent from the government's latest forecast of 35.3 bushels on Sept. 12.
But while soybean yields in some areas have improved, soy crops sown after the U.S. winter wheat harvest aren't doing as well, Huckabay said.
Hamburg-based Oil World analyst Thomas Mielke said China's government may be forced to reduce soybean stocks by about 4 million to 5 million tonnes by February.
Chicago December wheat rose 2.1 percent or 18 cents to $8.81-1/2 a bushel, recouping the previous session's 1.7 percent fall, while December corn rose 2.2 percent or 16-1/2 cents to $7.56-1/2 a bushel, having closed Tuesday down 1 percent.
Background support for wheat came from South Korean plans to purchase a combined 500,000 tonnes of reserves of corn, wheat and soybeans for feed in 2014, or five percent of the country's annual demand, to secure supplies in the event of a further rise in prices, the agriculture ministry said on Wednesday.