U.S. soybean futures fell on Thursday, reversing three days of gains, while corn dropped more than one per cent on tepid U.S. export sales and mounting concerns about weak demand.
Wheat was down one per cent, posting its biggest loss in two weeks, and on the heels of Wednesday's nearly two per cent rally in response to news Ukraine would ban wheat exports from Nov. 15.
The worst drought in half a century drove prices to historic highs this summer and there are signs demand is waning as end-users back away from the market due to poor profits.
Chicago Board of Trade (CBOT) November soybean futures were down 6-1/2 cents at $15.64 per bushel, December corn was down 12-1/2 cents at $7.42 per bushel and December wheat was down 11-1/4 cents at $8.72-3/4 per bushel (all figures US$).
CBOT soymeal futures gained from $2 per ton to over $5 per ton in the deferred futures contracts but ended weak in the nearby months with spot December down 50 cents at $481.40 per ton and were underpinned by higher cash soymeal markets in the U.S. Midwest for the third day in a row.
Cash merchants said slow farmer selling of soybeans buoyed soymeal as the U.S. soy harvest winds down. Cash meal markets were $1 to $2 higher at locations in Iowa and Minnesota and rail shipments were up $2 per ton in Kansas City on an increase in demand.
The U.S. Department of Agriculture's (USDA) weekly export sales report, released at 7:30 a.m. CDT, was disappointing for corn and soybean bulls but encouraging for wheat bulls.
"Everything did turn down right after the numbers were released. Wheat sales were above expectations, which is kind of surprising since we're supposed to be priced out of the market in many cases," said Roy Huckabay, analyst for the Linn Group.
USDA in its weekly export sales report said net export sales of U.S. wheat last week totaled nearly 572,000 tonnes, above estimates for 350,000 to 450,000.
Corn sales were at 142,400 tonnes, below estimates for 150,000 to 250,000. Soybean sales also were lower than expected at 522,200, versus estimates of 650,000 to 850,000 tonnes.
Huckabay also said cancellation of corn purchases by China pressured the market.
USDA said China canceled two cargoes of corn last week and 173,000 tonnes of soybeans previously earmarked for China were switched to Taiwan and Thailand. USDA last Thursday also reported a decrease of corn sold to China.
Foreign grain buyers at an Export Exchange conference in Minnesota on Wednesday said the worst drought in half a century has led long-time importers of U.S. corn to forge ties with alternative suppliers, casting a shadow over the United States' continued dominance in the export markets.
Soy target $15.50, corn $7.50
Position-squaring was noted ahead of the expiration of November options on Friday.
"November options expire tomorrow and the target for soybeans is the $15.50 area and corn at $7.50. In soybeans, we had gotten a little overextended up to the $15.74 area," said Sterling Smith, futures specialist for Citigroup.
Smith also said the number of eggs placed in incubators for potential broiler production fell last week to the lowest since 2001, a bearish market factor for soymeal and soybean futures.
USDA's broiler hatchery report released on Wednesday showed 177 million eggs in incubators during the week ended Oct. 20, down four per cent from the eggs set the corresponding week a year earlier.
Broiler producers use extensive amounts of soymeal in their high-protein chicken feed.
"If we're going higher, I think soymeal and soybeans have to lead the way and without that leadership it might be difficult to rally," Smith said.
USDA last week released a cattle report that showed the number of young cattle placed in feedlots for future slaughter at a level below expectations, down almost 20 per cent from a year ago and the smallest September placements since records began being kept in 1996.
South American soy
Further weight on the soybean market stemmed from the potential for a bumper South American soybean crop and improving weather prospects for November seedings.
Very little rain was noted on Wednesday and occasional showers are possible in central and northwestern Brazil over the next week, according to Joel Widenor, meteorologist for Commodity Weather Group. "Most of the rain will focus on the Rio Grande do Sul region," he said.
Excessive wet weather is the issue in Argentina with about half of the corn and wheat areas experiencing too much water, he said, adding rains are likely Sunday and Monday, followed by drier weather. More rain is expected early in November.
-- Sam Nelson reports on grain and soy markets for Reuters from Chicago. Additional reporting for Reuters by K.T. Arasu and Karl Plume in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.