U.S. soybean and wheat futures rose on Tuesday, spurred by strong demand for U.S. supplies on the export market, traders said.
Corn futures closed lower, with traders noting a round of profit-taking after two straight days of gains pushed prices to a three-week high on Monday.
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Wheat notched the biggest gains, led by a 2 percent jump in KCBT hard red winter wheat. Market talk of purchases of hard red winter wheat by Brazil spurred the gains although there was no confirmation of deals.
Some bargain buying also added support to wheat prices, which were trending near 3-1/2-year lows due to plentiful supplies.
"We've been oversold for quite some time," said Shawn McCambridge, grains analyst at Jefferies Bache.
The benchmark Chicago Board of Trade March soft red winter wheat settled up 5-3/4 cents at $5.79-1/4 a bushel.
KCBT March wheat, which also benefited from concerns about dry conditions in the U.S. Plains limiting crop production there, rose 12-1/4 cents to $6.32 a bushel. In percentage terms, the 2 percent gain for the front-month KCBT contract was its biggest in three months.
CBOT soybeans for March delivery rose 12-3/4 cents to $13.07 a bushel, pushing through key resistance points at its 30- and 50-day moving averages during the session.
"This is a function of strong Chinese demand," said Terry Reilly, commodity analyst with Futures International in Chicago. "Even though we have had lots of talk about U.S. cancellations since early December, we haven't seen any evidence of China slowing down on buying beans."
Some hot weather in central and southern Argentina, which could cause some damage to the developing crop in those areas, added to the bullish tone.
Strong end-user demand lent further support. The National Oilseed Processors Association's monthly crush report due Wednesday is expected to show that the U.S. soybean crush was 163.9 million bushels in December, up 2.3 percent from November. CBOT March corn dropped 3 cents to $4.31-1/2 a bushel.
Corn futures rallied 5.4 percent in the previous two sessions, prompting a healthy round of farmer sales of crops they have held in storage since last fall. The country movement pushed down cash basis bids at country elevators and processors and added further weight to futures prices on Tuesday as commercial buyers sought to hedge their recent purchases.
"Corn has cooled quickly following the bullish USDA surprise and a 20-cent gift," Matt Zeller, director of marketing information at INTL FCStone, said in a note to clients.
The U.S. Department of Agriculture stirred up the corn market on Friday by unexpectedly cutting its yield estimate for the 2013 U.S. harvest, while also putting ending stocks below the consensus of trade estimates.
(Additional reporting by Julie Ingwersen and Christine Stebbins; Editing by Matthew Lewis and James Dalgleish)