CHICAGO: US soybean futures fell more than 2 percent on Wednesday, their steepest slide in 1-1/2 months, as rains in Argentina aided drought-stressed crops in key production areas of the world's No. 3 exporter of the oilseed, traders said.
Corn was marginally lower as early pressure from Argentine rains was nearly offset by light buying ahead of a US Agriculture Department report on Thursday, which was expected to show a tightening global corn supplies.
Wheat was lower for most of the day on spillover pressure from corn and soybeans and a firmer dollar but rebounded to close slightly higher, helped by late-session short-covering and buying tied to annual index fund portfolio rebalancing.
Heat-stressed corn and soy crops in Argentina were receiving a welcome drink of water at mid-week with 1 to 2 inches (2.5 to 5 cm) of rain expected over nearly 100 percent of the country by the end of the day on Thursday. Some areas were seen getting up to 3-1/2 (9 cm) inches of rain.
"The rains in Argentina were about as expected and it definitely will improve the crop conditions. But another round of dry weather is expected after the rain and we don't see another rain event until Jan. 21-23," said Andy Karst, meteorologist for World Weather Inc.
But while soybeans pushed lower, trading in corn was more cautious ahead of the eagerly-awaited USDA crop report on Thursday, which was expected to indicate that some South American corn has suffered irreparable damage.
"The initial selling (in corn) squeezed out the positions that wanted to be evened up before the report," said Shawn McCambridge, analyst with Jefferies Bache.
"The overall sentiment heading into this report is a tighter US (corn) balance sheet and, with the production problems in South America, a tighter world balance sheet. So the general feeling that the report will be supportive to bullish attracted fresh buying on the modest early weakness," he said.
SOY CROP MAY RECOVER
Most of Argentina's corn crop was in the critical, yield-determining pollination phase of development during the hottest, driest weather of the past month. Soybeans, however, could still benefit from timely rains.
"The market has transitioned its point of view about the weather in Argentina as more of a soybean issue now than a corn issue," said Rich Nelson, analyst with Allendale Inc.
"The rain overnight is fueling ideas that the beans may not be as damaged. But corn pollination was so poor that you're probably not going to save the crop," he said.
Chicago Board of Trade March soybeans fell 29 cents, or 2.4 percent, to $12.03 a bushel in the steepest decline since Nov. 23.
March corn lost 1/2 cent, or 0.1 percent, to $6.51-1/2 a bushel. CBOT March wheat gained 1-1/4 cents, or 0.2 percent, to $6.41 a bushel.
Traders will now turn their attention to Thursday's eagerly awaited January USDA crop report, which, historically, has triggered sharp price moves in futures.
USDA was expected to trim US corn ending stocks to a fresh 16-year low and downgrade corn and soy crops in South America. The government report was also expected to show an increase in US winter wheat plantings to the largest in three years.
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