U.S. soybean futures slid on Wednesday, breaking a three-session rise, and corn fell for a fourth straight day on profit-taking ahead of a government crop report on Friday and as some weather forecasts suggested a wetter trend in Argentina next week.
Wheat rebounded from a 3-1/2 week low after dropping for four consecutive sessions in a bargain-buying bounce and on signs of improving export demand.
Fluctuating South American weather forecasts have steered grain markets this week and stirred debate on whether, or to what degree, the U.S. Department of Agriculture will adjust its world supply/demand balance sheet.
Markets are relying on large South American corn and soy crops to replenish tight global supplies following a severe U.S. drought in 2012, but a dry spell in Argentina has trimmed expectations for the No. 3 corn and soybean producer's output.
"The American model is trending a little wetter next week for Argentina. Some of the forecasters that I follow think the model is overdoing it, but nonetheless it's something people are trading," said Jim Gerlach, president of A/C Trading in Fowler, Indiana.
"There will be scattered showers but coverage will be poor," World Weather Inc. agricultural meteorologist Andy Karst said. "There will be increasing stress and yield losses."
Most of Brazil was in good shape with farmers able to harvest around showers in the north, while dryness has returned to the northeast, Karst said. Dryness also is becoming an issue in southern Brazil and in Paraguay, he said.
Brazil's vegetable oils association, Abiove, and consultants FCStone raised their soy crop forecasts on Tuesday from previous estimates as beneficial weather over the world's second-largest soybean producer pushed up yields.
Other private forecasters have trimmed their projections in recent days, citing rains in northern Brazil.
U.S. crop forecasts
An expected strong rebound in U.S. corn and soybean production following the country's worst drought in a half century in 2012 also hung over prices.
The U.S. Congressional Budget Office projected on Tuesday that U.S. farmers will plant huge amounts of corn and soybeans this year, producing a record corn crop and, barring weather problems, ending three years of razor-thin supplies.
Crop forecaster Lanworth on Wednesday issued a record outlook for U.S. corn production of 13.8 billion bushels in the 2013-14 crop year, with average yields rising to 155.6 bushels per acre.
Chicago Board of Trade (CBOT) March soybeans slid eight cents, or 0.5 per cent, to $14.87-1/2 a bushel. The contract climbed on Monday to the highest point since mid-December, but has struggled to breach the $15-a-bushel mark (all figures US$).
CBOT March corn gave up 6-1/2 cents, or 0.9 per cent, to $7.22-1/2 a bushel.
Wheat futures rebounded midmorning after falling to the lowest level since Jan. 11 and amid strong export prospects for the coming months for U.S. SRW wheat, which was among the least expensive in the world.
Export premiums for soft red winter wheat at the U.S. Gulf Coast have climbed about 10 cents per bushel this week, cash grain traders said.
Wheat also drew underlying support from forecasts for a shift back to drier weather in most of the key growing areas of the drought-stricken U.S. Great Plains hard red winter wheat region.
CBOT March wheat rose four cents, or 0.5 per cent, to $7.61-1/2 a bushel.
Commodity funds bought an estimated net 2,000 wheat contacts on the day and sold a net 7,000 corn and 4,000 soybean contracts.
-- Karl Plume writes for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore, Ivana Sekulatac in Amsterdam and Sam Nelson in Chicago.