GRAINS-U.S. corn, soy and wheat futures firm on short-covering

(New throughout, updates prices, market activity and analyst comments into U.S. trading session, new byline, changes dateline; pvs PARIS/SINGAPORE)

CHICAGO, Dec 13 (Reuters) - U.S. wheat and corn futures rose on Wednesday, bouncing from contract lows hit the previous session as traders covered short positions, traders said.

Soybean futures also firmed after sagging on Tuesday following the release of a U.S. government report that highlighted the bearish global supply situation.

Chicago Board of Trade soft red winter wheat notched the biggest gain, rising 1.1 percent after the most-active contract sagged to its lowest in more than 11 months.

"You have such a good short in the market that you are probably at or near prices that suggest limited downside for the moment," said Greg Grow, director of agribusiness at Archer Financial Services. "The markets are still in bear markets."

At 10:25 a.m. CST (1625 GMT), CBOT March soft red winter wheat futures were up 4-1/2 cents at $4.15-1/4 bushel.

CBOT wheat has posted seven straight lower closes. On Tuesday, it reached its lowest since Jan. 4 at $4.10-1/2 a bushel.

CBOT March corn futures were up 1-1/2 cents at $3.49-1/4 a bushel.

CBOT January soybean futures were 1-1/4 cents higher at $9.77 a bushel. Soybeans have posted five straight lower closes, shedding 3.3 percent during the streak. It was the longest stretch of negative sessions for soybeans since March.

In a monthly report on Tuesday, the USDA offered few surprises to grain markets as it confirmed large global inventories and adjusted its U.S. supply and demand outlook to factor in tough competition for U.S. exports and strong ethanol demand for corn.

The USDA raised its forecast for world wheat stocks in 2017/18 to a new record, while also increasing the expected stockpile in the United States.

U.S. market participants took heart from a rare sale of wheat to Algeria announced this week, but overseas competition remains stiff as illustrated by Egypt's latest purchase of Black Sea origins in a tender on Tuesday.

The USDA raised its outlook for 2017/18 U.S. soybean ending stocks after cutting its export forecast but traders said the market was more focused on improving indications for South American harvests in the coming months.

Weather forecasts have called for rain in the coming days in dry areas of Argentina, the world's top soymeal exporter and the No.3 corn supplier.

Brazilian government food supply agency Conab forecast the country's 2017/18 soybean crop at 109.2 million tonnes, topping its month-ago range of estimates for 106.4 million to 108.6 million tonnes. (Additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; Editing by Joseph Radford, Gareth Jones and David Gregorio)