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Rain pulls CBOT soy off two-month high

Tour group reporting above-average corn yield potential

Chicago Board of Trade (CBOT) new-crop November soybean futures fell one per cent on Thursday and corn tumbled nearly four per cent as better-than-expected rains in the northern U.S. crop belt eased fears of late-season crop damage.

"We picked up some rains overnight in northeast Nebraska and northwest Iowa, with up to two inches in LaMars, Iowa," said Sterling Smith, futures specialist for Citigroup. "That's crop country that's been dry for awhile."

A turn to warmer and drier weather that was threatening the crop had boosted soybean futures to a two-month high earlier in the week.

Corn backed down from a four-week peak hit earlier in the week as the crop-friendly showers led to prospects for better corn yields.

"Weather maps have good rains falling in areas of traditionally heavy production and areas that have been pretty dry, rains that are very welcome and very timely," said Shawn McCambridge, analyst for Jefferies Bache.

Corn also took pressure from a Pro Farmer crop tour report of above-average yield potential in the seven states scouted this week, while wheat was pulled down by falling corn and soybeans.

CBOT November soybeans closed down 17-1/4 cents per bushel at $12.86-3/4, new-crop December corn was down 18-3/4 at $4.64-1/2, and September wheat was down 8-1/4 at $6.30-1/2 (all figures US$).

"Weak technicals are in play, too, with congestion at the $13 area in November," Smith said. "If there's an inability to hold above $13, I think fund longs will be a little nervous, and that could bring in some liquidation pressure."

"The rally in soybeans has been largely sparked by concerns about crop-threatening weather in the U.S.," Saxo Bank analyst Ole Hansen said, adding that any signs of improvement to U.S. crops may take some of the steam out of the soybean rally.

"Considering the size of the soybean rally, we could correct as far back as $12.60 on the Chicago November soybean contract without a major change to the overall perception of the market," Hansen said.

A stronger dollar, potentially damaging for U.S. exports, added pressure to the markets, analysts said.

"We have seen a big rally in soybeans to two-month highs on Wednesday, which has led to some profit-taking, and the stronger trend in the dollar today has also added some momentum to the downside," Hansen said. "Corn and wheat are being pulled down by the weakness in soybeans.

"Overall this is providing a framework for some people to take some risk off the table today."

Heavier-than-expected rains fell overnight in portions of the northern U.S. Midwest, which will help boost corn and soybean development, an agricultural meteorologist said Thursday.

"They were slightly better in northern Iowa and southern Minnesota, but the rains have still done very little to ease concerns in the driest areas," said Joel Widenor, meteorologist for Commodity Weather Group.

The midweek showers outweighed the support from forecasts for hotter weather across the Midwest by the end of the week, which would increase the threat to soy fields during pod setting and to corn during the kernel-filling phase of development.

Crop tour sees big corn yields

This week's Pro Farmer tour of crops in the U.S. Midwest has been reporting above-average yield prospects for corn, but soybean pod counts, one indicator of yields, have mostly been below average.

Crop scouts in east-central and northeast Iowa, the top U.S. crop state, predicted disappointing yields at harvest unless fields receive more rain soon. Otherwise, corn yield potential was above average.

Corn yields in Minnesota were above average and the crop was well behind normal maturity pace due to late planting and a cool summer. The crop is at risk from a fall frost. Soybean prospects were mixed in Minnesota.

The crop tour will draw to a close late on Thursday, and Pro Farmer is expected to issue its forecast for 2013 corn and soybean production on Friday. Pro Farmer will base the final forecast on the tour findings and on internal data.

-- Sam Nelson is a Reuters correspondent covering grain and oilseed futures markets in Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Colin Packham in Sydney.



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