U.S. soybean futures fell 0.7 per cent on Friday, halting a three-day rally, while wheat and corn pared early gains as fears about the health of the global economy prompted investors to exit riskier assets.
General Electric and McDonald's earnings disappointed and a perceived lack of progress on a Spanish bailout request reminded investors of the headwinds facing the world economy.
"We have had a round of liquidation on 'risk-off' trade. The metals are off and the S+P is testing major support. The dollar is turning higher. The second half of the (trading) session has been a throwback to last week, with fears about global demand," said Mike Zuzolo, president of Global Commodity Analytics in West Lafayette, Indiana.
At the Chicago Board of Trade, November soybeans ended down 11-1/4 cents at $15.34-1/4 per bushel. December wheat settled up four cents at $8.72-1/2 a bushel and December corn ended up 3/4 cent at $7.61-1/2 a bushel (all figures US$).
Along with macroeconomic concerns, soybeans were pressured after private analytics firm Informa Economics raised its forecast of U.S. 2013 soybean plantings to 79.987 million acres, which if realized would be the most on record.
"That is obviously negative, if there are no weather problems in South America," said Mark Schultz, analyst with Northstar Commodity in Minneapolis.
With the U.S. Corn Belt coming off its worst summer drought in half a century, the grains trade is counting on Brazil and Argentina to produce bumper corn and soybean crops and help replenish global inventories.
Traders eyed weather in South America, where planting is underway. Heavy rains expected in parts of southern Brazil and northern Argentina could delay corn seeding, Schultz said, prompting producers to switch some acres to soybeans, which can be planted later.
A cold front over southern Brazil will bring torrential rains to No. 3 soy-producing state Rio Grande do Sul on Sunday, local forecaster Somar said.
Despite Friday's sell-off, CBOT soybeans clung to a gain of 0.8 per cent for the week, the first weekly rise in a month, as the market rebounded from a 3-1/2-month low set Monday.
Corn ended the week up 1.2 per cent, its biggest weekly rise since August, and CBOT wheat rose 1.8 per cent, its biggest advance since July.
Word from Ukraine
U.S. wheat pared gains as the dollar rose but closed higher for a third straight day, supported by trade reports that Ukraine, the world's ninth-largest supplier, would ban exports of the grain from mid-November.
Corn closed narrowly mixed. A portion of Ukraine's wheat is considered feed and competes with corn, and the country is a competitor in the corn export market.
"It's just the beginning of what I think will be more business coming here (to the U.S.) and could be the beginning of another corn rally," said Chris Manns, president of Chicago trade house Traders Group Inc.
Others said the move was expected because of a well-publicized supply shrinkage stemming from drought stress on Ukrainian crops.
"I don't consider this any significant surprise and expect market reaction to prove temporary," said Dan Manternach, wheat analyst for Doane Advisory Services in St. Louis.
"After all, USDA has only forecast four million tonnes in exports from the Ukraine in the past two WASDE reports."
The U.S. Department of Agriculture this month listed Ukraine's wheat exports for the 2012/13 marketing year at four million tonnes, down from 5.44 million the previous year.
Ukraine would have been the ninth-largest global wheat exporter and would have accounted for three per cent of world wheat exports of 130.87 million tonnes, according to USDA's data.
"Some type of limitations were expected at the five million-tonne level, whether de facto or de jure, so in and of itself it's not a big deal," said Bryce Knorr, senior editor for Farm Futures magazine.
"But it's one of a series of events over the last year that have tightened global wheat inventories around 15 per cent from levels of two or three years ago."
-- Julie Ingwersen and Sam Nelson
write for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris, Sarah McFarlane in London and Naveen Thukral in Singapore.