U.S. soybeans slid over one per cent on Wednesday, notching the biggest one-day drop in three weeks as the harvest in the Midwest farm belt got underway and on profit-taking a day after prices set an all-time high near US$18 per bushel.
Prices in the cash market have been tumbling on expectations for increased supplies from the harvest, which is expected to yield a smaller crop due to the worst drought in half a century.
Corn eased two per cent on profit-taking as traders began squaring positions ahead of the U.S. Department of Agriculture's crop report next Wednesday and on harvest pressure.
Wheat fell over two per cent, declining for the fourth consecutive session as rain improved prospects for the drought-stricken wheat crop, and on signs of stiff competition for U.S. wheat exports from Black Sea sellers.
"Commercial guys (grain companies) are saying farmers are selling a lot of their (soybean) crop right off the combine at these high prices. That's bringing the basis down," said Dan Cekander, analyst for Newedge USA.
Basis bids to buy soybeans in the cash markets fell as much as 25 cents per bushel on Wednesday due to harvest pressure (all figures US$).
USDA next Wednesday will release its September crop production and supply/demand reports and see saw trade is expected ahead of the release of that data.
"We're just biding our time until we see what USDA says next week," McCambridge said.
Traders said the markets were taking a breather after the worst drought in 56 years slashed crop prospects leading to a summer rally to record highs of nearly $8.50 for corn in late August and almost $18 for soybeans yesterday (Tuesday).
Chicago Board of Trade (CBOT) December wheat was down 21 cents per bushel at $8.67-3/4, December corn was down 14-1/4 at $7.90-3/4 and November soybeans were down 20-3/4 at $17.47-1/2.
Spot soybeans have jumped 33 per cent in just two months while spot corn soared nearly 50 per cent.
Wheat prices rose more than 50 per cent as well but much of the support in wheat came from spillover buying due to the soaring corn and soybean markets.
The worst drought in the United States in more than half a century had also led to concerns about autumn seedings of winter wheat, but wetter weather is helping alleviate those concerns and weighing on prices.
Hurricane Isaac slammed into the U.S. Gulf Coast last week and remnants include welcome rain across a broad swath of the U.S. Midwest and portions of the Plains winter wheat region.
Rains were expected to continue in the central Midwest, slowing corn and soybean harvest but adding valuable soil moisture ahead of winter wheat plantings, an agricultural meteorologist said on Wednesday.
"It won't be good for corn or beans but it will help wheat," said Don Keeney, meteorologist for MDA EarthSat Weather.
Keeney said the rains would extend to the central Plains on Thursday then move into the southern Midwest and Delta on Friday. Drier weather is expected next week, he said.
"The rains will improve soil moisture but certainly not enough to end the drought," he said.
Wheat exporters are focusing on the stiff competition for business from low-priced Russian wheat, which is still pouring into global export markets despite fears drought will cut the Russian crop by 30 per cent this year.
Russian wheat was offered at an unbeatable $40 a tonne cheaper than U.S. supplies in a weekend purchase tender from Egypt, traders said.
"It has taken a few large tenders for the market to realize that U.S. wheat is too expensive," said one Melbourne-based analyst. "The weather in the U.S. wheat belt is looking better for the winter crop seeding."
Black Sea wheat has been sought after over the past few weeks, boosting expectations that Russia will curb exports amid dwindling domestic supplies, although the government denied on Friday it was planning to limit sales.
-- Sam Nelson is a Reuters correspondent in Chicago. Additional reporting by Naveen Thukral in Singapore and Michael Hogan in Hamburg.