U.S. wheat futures bounced back on Wednesday, snapping a three-session losing streak, as traders took positions ahead of a key U.S. government report expected to estimate lower global output after Black Sea crop damage.
Analysts said additional support for the Chicago wheat market stemmed from U.S. wheat sales to Egypt and China, a sign that buyers are turning to the United States for supplies.
The drought in eastern Europe -- which has boosted U.S. wheat futures since the end of June -- shows no sign of respite, with a senior Russian weather official predicting on Tuesday that the heat in most parts of European Russia is likely to continue over the next 10 days.
The global grain markets remain very nervous and any further hot and dry conditions in Russia continue to unsettle the market, said Garry Booth, a trader with MF Global Australia. Export numbers coming out of the U.S. have been a good surprise.
Private exporters reported the sale of 120,000 tonnes of U.S. wheat, mainly to China and Egypt, the U.S. Department of Agriculture said on Tuesday.
Chicago Board of Trade wheat futures are up 66 percent from the June low of $4.25- a bushel despite losses since the market fell from a two-year peak on Friday.
On Wednesday, CBOT wheat for September delivery rose 1.9 percent to $7.07- per bushel by 0259 GMT after sliding 2.5 percent in the previous session.
China's National Bureau of Statistics warned that lower global wheat output could translate into inflationary pressure for the world's top producer and consumer of the grain.
Analysts were expecting the USDA's forecasts for U.S. wheat, corn and soybean production to rise when it releases its monthly estimate at 1230 GMT on Thursday.
But U.S. ending stocks were seen falling as global crop woes will force end users to look to the United States to satisfy their supply needs.
World wheat production was expected to come in at 650.02 million tonnes, down from the USDA's July forecast of 661.07 million tonnes, according to a Reuters survey.
CBOT September corn gained 0.4 percent to $3.95- a bushel and August soybeans were up 0.7 percent to $10.43- a bushel.
Soybeans and corn futures, which have been tracking gains in the wheat market, remain under pressure from expectations of large crops in the United States.
(Editing by Michael Urquhart)