U.S. soybean futures fell for a second straight day on Tuesday, sliding nearly two per cent to a three-month low as the record-fast U.S. harvest and better-than-expected yields weighed down prices along with spillover pressure from plunging palm oil prices.
Soybeans had pared early-session lows as the steepest two-day drop in two weeks triggered light commercial buying and short-covering, but the market settled near session lows.
Corn prices were mixed as pressure from a rapid harvest and spillover from lower soybeans was offset by thin stocks and slightly improved demand after the recent drop in prices.
Wheat fell for the sixth time in seven sessions, slumping along with soybeans and on forecasts for rain in the drought-parched U.S. Plains, which was expected to boost winter wheat planting.
"The extreme weakness in the Malaysian palm oil market is casting a pall across oilseeds of all shapes and sizes. Combine that with our (U.S. soybean) harvest moving along at a record clip and it's not creating an environment that's bullish for prices," said Sterling Smith, futures specialist with Citigroup.
"Fund managers are also still a little apprehensive about where to buy as the technicals continue to break down. That weakness is spreading into the corn and the wheat," he said.
The U.S. Agriculture Department said on Monday that the soybean harvest was 41 per cent complete as of Sept. 30, while the corn harvest was 54 per cent done, both a record-fast pace.
Steady reports of higher-than-expected soybean yields as August rains revived the drought-stressed crop offered little support to futures.
Investors awaited the latest corn and soybean production and yield forecast from commodity brokerage FC Stone, expected after the close on Tuesday.
A lull in export demand from top importer China, where markets are closed this week for a national holiday, also deprived the market of fresh bullish news.
Malaysian palm oil futures dived to their lowest in more than three years as slowing demand from Asia coincided with a drop in the edible oil's appeal as a substitute for soyoil.
Benchmark November soybeans on the Chicago Board of Trade (CBOT) fell 29-3/4 cents, or 1.9 per cent, to $15.30-1/2 a bushel, the lowest level for the front month contract since July 2 (all figures US$).
The November contract found some technical support at the 100-day moving average around $15.26-3/4. Commercial buying also developed near the lows.
Commodity funds sold an estimated net 9,000 soybean contracts, a day after selling a net 10,000 contracts, trade sources said.
CBOT December corn settled up 1-1/2 cents, or 0.2 per cent, at $7.58-1/4 a bushel while December wheat dropped 12-3/4 cents, or 1.4 per cent, to $8.71-1/2.
The front-month soybean/corn spread narrowed to $7.72-1/4 its tightest in four months.
Funds sold an estimated net 3,000 wheat contracts and bought a net 3,000 corn, trade sources said.
Investment bank Goldman Sachs said it expected corn and wheat prices to outperform soybean prices over the next few months due to bigger-than-expected U.S. soybean supplies reported by the government last week.
Goldman said in a research note to clients on Monday that it lowered its three- and six-month soybean price forecasts to $18.75 and $17.25 a bushel, respectively, from its previous outlook for $20 and $18.
-- Karl Plume writes for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Nigel Hunt in London.