Rising projections for South America's harvests knocked U.S. soybean futures to their lowest level in nearly two weeks Wednesday.
Soybeans for May delivery, the most actively traded contract, dropped 33 cents, or 2.4%, to $13.49 a bushel at the Chicago Board of Trade.
Grain futures also weakened, as selling flooded agricultural markets. Corn, however, avoided the steep losses that hit soybeans and wheat due to ongoing supply concerns.
Supply fears are easing for soybeans due to increasing forecasts for production in Brazil and Argentina. Soybean futures have lost 8% since hitting a 2 1/2-year high last month on worries about tight inventories.
"The market continued to fall today on ideas that near-term export demand will be shifting from the U.S. to South America," Doane Advisory Services told clients in a note.
The U.S. Department of Agriculture is expected to raise its outlook for Brazil's soy harvest to a record high in a monthly crop report Thursday. Harvest is underway in Brazil, the world's second-largest soybean exporter after the U.S., bringing fresh supplies to the world market.
Agricultural consultancy Celeres on Wednesday raised its estimate for total South American soy output 3% due to an increased forecast for Argentina, the third-largest exporter of soybeans and top exporter of soy products. Argentina's harvest will begin in the next several weeks.
Analysts, on average, expect USDA to raise its forecast for U.S. soybean supplies in Thursday's crop report. Supplies of corn and wheat, on the other hand, are projected to tighten.
Ongoing concerns about low supplies helped corn trim losses in late trading, traders said. A recent break in prices attracted users of the grain to the market, as supplies are already projected to drop to a 15-year low by the end of the crop's marketing year on Aug. 31, they said.
Corn futures have tumbled 5% since the nearby contract reached a 32-month high in intraday trading Friday. Prices had rallied on strong demand and concerns that farmers won't expand plantings enough this spring to replenish tight supplies.
"I think the end users ought to be doing jumping jacks," said Jason Britt, president of Central States Commodities, as corn prices were falling.
Wheat futures have retreated 18% from a 2 1/2-year high reached in February on an increase in demand. Prices extended losses Wednesday despite concerns about persistent dryness hurting output potential of the crop in the U.S. Plains.
Corn for May delivery closed down 4 1/2 cents, or 0.6%, at $7.01 a bushel. Soft red winter wheat for May delivery slumped 21 cents, or 2.7%, to $7.58 3/4.
Other MarketsSoy product futures weakened with soybeans. Soymeal for May delivery fell $7.50, or 2.1%, to $352.90 per short ton, while soyoil for May delivery sank 1.36 cent, or 2.3%, to 57.12 cents per pound.
Ethanol futures closed at a nearly two-week low, with the May contract stumbling 2.6 cents, or 1%, to $2.525 per gallon. Oat futures approached a 14-week low, as the May contract dropped 8 cents, or 2.1%, to $3.67 a bushel.
Hard red winter wheat for May delivery slid 20 1/2 cents, or 2.3%, to $8.53 1/2 a bushel at the Kansas City Board of Trade. Hard red spring wheat for May delivery tumbled 18 1/2 cents, or 2%, to $9.03 3/4 at the Minneapolis Grain Exchange.
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