U.S. corn futures eased on Thursday on concerns about sluggish demand after a report showed last week's export sales were well below expectations, although spillover support from a late-day rally in soybeans helped the market close above session lows.
Soybeans finished at a one-month high in a late technical and fund-buying surge. They rallied early on strong export demand as sales last week were the heaviest since September, then sagged before posting late gains.
Wheat was pulled along, recovering earlier losses to close modestly higher for a second straight day.
"Once we started to see the beans gain back some strength late in the day it brought in some short covering in the wheat though it didn't help the corn too much. With today's volume it really didn't take much to get these modest moves," said Shawn McCambridge, senior grain analyst at Jefferies Bache.
A nearly $2-a-barrel drop in crude oil and a stronger U.S. dollar, which increases costs for buyers holding other currencies, weighed on grains much of the day (all figures US$).
"We have a market here that is fighting a severe headwind," said Sterling Smith, futures specialist at Citigroup.
"The noticeable strength in the dollar (was) working against all of the markets, taking away soybeans' gains and leaving an unattractive chart path. Corn started out weak after the disappointing export sales and, coupled with a strong dollar, it made things really difficult in the grain room today," he said.
The U.S. Department of Agriculture reported net export sales of corn last week at 47,400 tonnes for the current and next marketing years, well below trade forecasts for 350,000 to 550,000 tonnes and the lowest figure in eight weeks.
Export sales of all classes of U.S. wheat were near the low end of trade expectations at 353,100 tonnes.
Chicago Board of Trade March corn fell 6-1/4 cents, or 0.8 per cent, to $7.51-1/2 per bushel. CBOT March wheat added two cents, or 0.2 per cent, to $8.62 a bushel.
CBOT January soybeans gained 12 cents, or 0.8 per cent, at $14.91-1/4 per bushel, rising for a fourth straight session and closing above its 40-day moving average of $14.84.
Commodity funds sold a estimated net 6,000 corn contracts on the day but bought a net 5,000 soybean contracts, trade sources said.
Robust export demand kept a firm floor under nearby soybean futures, but declining concerns about South American production limited gains in back months as Brazil's government reaffirmed its forecast for a record-large crop.
USDA said U.S. soybean export sales last week topped 1.1 million tonnes, the most in nine weeks. But soy product export data was mixed as soymeal sales notched a three-year high, while soyoil sales were the lowest in six weeks.
Traders said market talk suggested China, the world's largest consumer of the oilseed, had acquired up to six cargoes of U.S. soybeans this week from sellers in the Pacific Northwest, and that it would soon seek more volumes.
-- Karl Plume is a reporter for Reuters in Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Sybille de La Hamaide in Paris.