U.S. soybean prices fell for the third consecutive trading session on Thursday, extending losses after China, the world's biggest soy importer, cancelled orders for U.S. soy and on expectations for bumper crops in South America.
"We're about two weeks away from the start of probably a record Brazilian soybean harvest," said Art Liming, futures specialist for Citigroup. He said the upcoming harvest and news of China's cancelled order led soybean prices lower on Thursday.
Losses were slowed since soybeans have already fallen two per cent for the holiday-shortened week. Markets were closed on Tuesday, New Year's Day.
Private exporters on Thursday reported the cancellation of 315,000 tonnes of soybeans sold to China for delivery this marketing year, the U.S. Department of Agriculture said.
USDA gave no reason for today's cancellation, which follows China's scrapping of purchases totalling 840,000 tonnes in the week of Dec. 16. Another 120,000 tonnes cancelled that week by buyers not specified by USDA were believed by traders to have also been bought by Chinese importers.
Corn and wheat eased to their lowest levels since July and late June, respectively due to a firm dollar and spillover pressure from lower soy. But declines were slowed since each market had fallen to or near oversold technical levels.
"Wheat got a little overextended and filled some technical levels. It found some support yesterday and was trying to recover and stabilize," Liming said. "The same with corn."
Chicago Board Of Trade (CBOT) March soybeans were down 5-3/4 cents per bushel at $13.86-1/2, March wheat was up 1/4 at $7.55-1/2 and March corn was down 1-1/2 at $6.89-1/4.
Traders continue to closely monitor soybean crop prospects in South America, the world's largest producer of soybeans.
The USDA attache in Brazil raised its outlook for Brazilian soybean production to 83.0 million tonnes, above USDA's current forecast for 81 million.
USDA will update its South American crop forecasts in its January crop report, to be released Friday next week (Jan. 11).
Forecasts of improving weather in Argentina have offset fears about the impact of widespread flooding earlier in the season.
In Brazil, isolated showers on Wednesday were limited to southern and west-central Minas Gerais, south-central Sao Paulo and northeastern Mato Grosso. Rains may reach most of Brazil in the next 10 days, aiding corn and soybean growth, said Joel Widenor, meteorologist for Commodity Weather Group.
But Widenor said the rains may be too late to reverse December corn and soybean losses in eastern Mato Grosso and Goias.
Rains will increase in Argentina this weekend into Monday, including needed rains into cotton and minor corn and soybean areas in far northern regions, Widenor said.
"Given December rainfall, this will leave Cordoba, where up to 25 per cent of corn and soybeans are grown, at most risk for some slowly developing dryness," he said. The hottest weather is likely next week, when highs will intermittently spike into the 90s and low 100s Fahrenheit, Widenor said.
Dry weather that has allowed Argentine farmers to speed soy and corn planting is expected to last until mid-January, setting the stage for big harvests as early-season flooding gives way to a blazing Southern Hemisphere summer sun.
Growers in most of the main crop belt have stepped up the pace of planting over the last two weeks and analysts say the acreage lost to flooding should be offset by wider plantings in outlying parts of the country.
Soybean oil, which climbed 2.8 per cent on Wednesday, was down 0.14 cent per pound but was underpinned by U.S. legislation on favourable tax perks for the biodiesel industry.
The $1 a gallon tax credit for biodiesel will run through 2013 at a cost of more than $2 billion under a provision of the mammoth legislation passed by the U.S. Congress late Tuesday.
-- Sam Nelson covers the CBOT grain and soy futures markets for Reuters in Chicago. Additional reporting for Reuters by KT Arasu in Chicago, Valerie Parent in Paris and Naveen Thukral in Singapore.