CHICAGO: US corn and soybean futures fell more than 1 percent on Friday, extending losses after a midday forecast for more crop-boosting rain on South American production areas added to bearishness from a US government crop report a day earlier.
A firmer US dollar and fears of a euro zone credit rating downgrade added pressure across commodities markets, including grains which were poised for a second consecutive losing week.
Financial markets plunged and the dollar rallied 1 percent after reports circulated that Standard & Poor's was set to downgrade the credit ratings of France and Austria.
Grains opened lower on follow through selling from the US Department of Agriculture monthly crop report. The USDA estimated larger-than-expected grain supplies, which sent prices to three-week lows on Thursday with the sharpest drops in 3-1/2 months in corn and wheat.
USDA also trimmed its forecasts for the impact of drought in Argentina and southern Brazil to less than trade consensus.
On Friday, Argentina's Rosario Grains Exchange took a more pessimistic view on the corn crop outlook, slashing its forecast by 18 percent to 21.4 million tonnes, but held its soy crop forecast steady at 49.5 million tonnes.
WET WEATHER FORECAST
Forecasts on Friday suggested a wetter trend than earlier weather models over the next two weeks.
"The (midday) run of the American model came in wetter in the six to 10 day period for almost all of Argentina and southern Brazil. A lot of those areas are being watched closely because of the moisture deficit," said Joel Widenor if Commodity Weather Group, LLC.
"We're still holding on to our forecast of more limited precipitation in the six to 10 day, but the fact that the model trended wetter got some folks thinking the rain might be coming in a little quicker," he said.
Chicago Board of Trade corn for March delivery fell 1.4 percent to a three-week low of $6.03 per bushel by 12:44 p.m. CDT (1844 GMT) after falling more than 6 percent on Thursday in its steepest slide since September 30.
Corn had an expanded trading limit of 60 cents on Friday after closing down the regular 40-cent limit on Thursday.
March soy fell for a fourth consecutive day, shedding 1.5 percent to $11.64-3/4 a bushel.
Corn was poised for its steepest weekly decline in 16 weeks. After rising for three straight weeks, soybeans were set for their largest drop in 1-1/2 months.
CBOT March wheat was 0.2 percent lower at $6.04 a bushel a day after the sharpest decline since late September. Wheat was in position to close lower for a second straight week.
Wheat prices plunged on Thursday as the USDA further bloated the wheat supply outlook by forecasting the biggest global stocks in 12 years and the highest US winter wheat seedings in three years.
Markets will be closed on Monday for the Martin Luther King Jr. Day holiday.
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