(Adds closing prices, details on Argentina weather)
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 1.4 percent, which was the biggest gain for the most-active contract in percentage terms in three months. It sagged to its lowest in more than 11 months on Tuesday.
"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."
CBOT March soft red winter wheat futures settled up 6 cents at $4.16-3/4 per bushel.
CBOT wheat had 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 1-1/4 cents higher at $3.49 a bushel.
CBOT January soybean futures closed up 3-1/2 cents at $9.79-1/4 a bushel, snapping a streak of five straight declines. Soybeans fell 3.3 percent during the stretch, which was the longest string of negative closes for the oilseed 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.
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.
"The increase in rainfall across most of the major growing areas in Argentina should lead to improvements in soil moisture, although more rainfall will still be needed," weather forecaster Cropcast said in a note to clients. (Additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; editing by David Gregorio and Jonathan Oatis)