GRAINS-Corn, wheat climb on bargain-hunting, paring big weekly losses

By Julie Ingwersen

CHICAGO, Jan 16 (Reuters) - U.S. corn futures rose more than 1% on Friday, paring some of this week's steep declines, as exporters and domestic users stepped in to buy cash-market grain at discounted prices, analysts said.

Signs of export demand and short-covering lifted wheat futures as well, and soybean futures followed the firm trend, underpinned by a robust domestic soy crushing pace.

Canadian canola futures, meanwhile, climbed to a six-week high after Ottawa announced a trade deal with Beijing that will cut Chinese tariffs on Canadian canola.

As of 12:58 p.m. CST (1858 GMT), Chicago Board of Trade March corn CH26 was up 4-1/2 cents at $4.24-3/4 per bushel. CBOT March wheat WH26 was up 7-1/4 cents at $5.17-3/4 a bushel and March soybeans SH26 were up 4-1/2 cents at $10.57-1/2 a bushel.

Corn futures were still down more than 4% for the week, their biggest weekly decline since July. Prices tumbled on Monday after the U.S. Department of Agriculture pegged U.S. production and inventories above analyst expectations.

But the price drop appears to have attracted bargain hunters. The USDA confirmed private sales of 418,000 metric tons of U.S. corn under its daily reporting rules on Friday, following another 760,302 tons announced a day earlier.

"The break on the Board has reinvigorated export demand," said Terry Linn, an analyst with Linn & Associates in Chicago. "After we've kind of absorbed the supply-side realities from the (USDA) crop report... world buyers are stepping in, and we are seeing that from (domestic) end-users as well."

Wheat drew support from fresh global export tenders this week including Saudi Arabia seeking to buy 595,000 tons of wheat. Meanwhile, managed commodity funds hold a sizable net short position in CBOT wheat futures, leaving the market prone to short-covering rallies.

Soybeans followed corn and wheat higher while soyoil futures BOv1 eased, pausing their strong climb this week tied to optimism about biofuel demand. The soy complex drew support from reminders of a strong U.S. soy processing pace, with the National Oilseed Processors Association on Thursday reporting the second-highest monthly crush volume on record for December.

"We've got off-the-charts record crush here, and that is going to offset a lot of the loss of (U.S. soybean) export demand," Linn said.

Brazil is about to start harvesting a record-large soybean crop that is expected to dominate global soy export business in the coming months.