Chicago wheat futures edged higher for a second day on Friday as an upturn in international demand and an official forecast for the lowest U.S. wheat area since 1970 encouraged the market.
But gains were limited as the prevailing mood remained bearish in the face of large global grain supplies and improving crop conditions in the northern hemisphere, factors that helped to send prices to a five-and-half-year low on Wednesday. Corn was flat after falling on Thursday when the U.S. Department of Agriculture's (USDA) crop area forecasts pointed to more corn acreage this year. Soybeans were slightly higher.
Traders were also digesting USDA supply and demand forecast for 2016-17 released on Friday on the second day of its annual outlook conference. The projections pointed to another rise in U.S. corn and wheat stocks next season and a slight fall for soybeans.
The Chicago Board of Trade's most active wheat contract was up 0.3 percent at $4.55-1/4 a bushel by 1219 GMT. But it remained down over the week after falling to its lowest since June 2010 at $4.46-1/2 on Wednesday.
"There are lot of wheat importers who have come back into the market in the last couple of days after the breaking of chart support levels in Chicago and Paris," Alexandre Boy of consultancy Agritel said. "But the potential for a rally is limited unless we have a weather problem and there are no signs of major frost risks in the coming weeks."
A number of importing countries have launched tenders, with top wheat buyer Egypt booking 300,000 tonnes on Thursday and Saudi Arabia taking offers on Friday in a tender to import 770,000 tonnes.
The wheat market also drew some support from the USDA's estimate on Thursday that the area sown with the cereal this year in the United States would fall by 3.6 million acres to a 46-year low.
However, analysts said the projection was not a major surprise given that the USDA had previously put winter wheat sowings down sharply, and the subsequent supply and demand projections showed inventories would still increase next year.
CBOT soybeans rose 0.3 percent to $8.68-1/4 a bushel to recover from a two-week low in the previous session, while corn was flat at $3.60-1/2 a bushel.
Traders were cautious about the USDA's initial outlook for a smaller soybean area this year, while harvest progress in top exporter Brazil was also keeping a lid on soybean prices.
Corn also faced pressure from International Grains Council forecasts issued on Thursday. The IGC raised its forecast for global corn production in 2015-16 and projected an increase in the worldwide planted area in 2016-17.