U.S. corn, soybean and wheat futures fell on Thursday as traders locked in profits from sharp rallies earlier in the week.
The downturn in corn and wheat completely erased the week's gains, but declines in soybeans were limited by concerns that crop yields could be reduced in coming days if hot and dry weather persists.
Updated weather forecasts promised some relief for the parched crops, which was enough to send soybeans slightly lower after trending higher for much of the morning.
"I think morning maps were cooler, afternoon maps were wetter, and it took the steam out of the bulls going into the last half of the trading day," said Mike Zuzolo, president of Global Commodity Analytics.
Traders squared positions ahead of the U.S. Labour Day holiday and the end of the month.
Concerns that U.S. wheat was too pricey to compete on the world market added further pressure to that commodity. Chicago Board of Trade (CBOT) wheat futures have fallen for three days in a row.
CBOT September soybean futures closed down three cents at $14.30 per bushel. The new-crop November contract was 4-1/4 cents lower at $13.68-1/2 a bushel (all figures US$).
First notice day for the September contract is on Friday, but no deliveries were expected.
"The soy complex is really the only one that has got any fresh news that is really worth talking about," said Karl Setzer, analyst for MaxYield Co-operative. "There is still time for some loss on soybean yields. Whatever damage that is going to be done to the corn has already been done."
The recent stretch of hot and dry weather will likely cut down the size of the final U.S. soybean harvest, Setzer said, and force the U.S. Agriculture Department to tighten up its balance sheet.
The soy crop, while well behind its typical development pace, is running out of chances to get rain that would boost final yields.
"By the time we get to next weekend, it is a question of how much good the rain will do for the crops," said John Dee, meteorologist at Global Weather Monitoring.
CBOT September corn was down 7 cents at $4.97-1/4 a bushel.
CBOT September wheat was off 5-1/4 cents at $6.41-1/4 a bushel. The contract bottomed out at $6.40, matching the weekly low hit on Monday.
U.S. wheat was not even offered in the latest tender by Egypt because it was too expensive compared to supplies from other countries. Egypt, the largest importer of the grain, bought 295,000 tonnes of Russian, Ukrainian and Romanian wheat for October shipment in a deal announced on Wednesday.
"The U.S. and west Europe does not look competitive in the key Egyptian wheat market and prices will have to move down sharply if more business is to be expected in the Middle East against tough Russian and Ukrainian competition," a trader said.
The grains complex was also undermined by a stronger dollar, which makes U.S. grains more expensive in export markets, coupled with weaker oil prices.
-- Mark Weinraub is a Reuters correspondent reporting on grain futures from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Naveen Thukral in Singapore and Michael Hogan in Hamburg.