U.S. grain futures weakened on Thursday, as expectations for an increase in global supply and concerns about the economy halted a two-day advance in soybeans.
Soybeans had closed higher for the previous two days in a modest rebound from a drop to 4-1/2-month lows intraday on Tuesday.
Expanding supply forecasts have weighed on the soy market since the U.S. Department of Agriculture, in a crop report on Friday, made a surprisingly big increase to its estimate of the U.S. soy harvest and raised its outlook for global stocks.
"We're still getting over last week's crop increase, and things are going fairly well in South America," said Jim Gerlach, president of A/C Trading.
The market is keeping a close watch on soybean planting in Brazil and Argentina -- the world's second- and third-largest exporters, respectively -- with buyers expecting bumper crops early next year to ease global supply tightness.
Conditions in central and northern Brazil are "near ideal" thanks to timely rains, said Don Roose, president of brokerage U.S. Commodities.
Markets also felt pressure from concerns the U.S. economy could slip into recession if no deal is reached in Washington to avoid a combination of government spending cuts and tax increases taking effect in January, he said.
January soybeans tumbled 1.2 per cent to $14.02 a bushel at the Chicago Board of Trade. December corn eased 0.6 per cent to $7.21-1/4 a bushel, while December wheat was down 0.4 per cent at $8.45-1/2 a bushel (all figures US$).
Commodity funds sold an estimated 5,000 contracts each of soybeans and corn and 3,000 wheat contracts, traders said.
Wheat extends slide
Wheat closed lower for a fifth consecutive session amid technical selling, its longest losing streak in 2-1/2 months, analysts said.
Expectations that relatively ample U.S. supplies may be needed to make up for shortfalls among other major exporters helped limits losses, they said.
Traders are "getting close to the point of seeing Ukraine just about out of the markets," said Jack Scoville, vice-president for Price Futures Group.
Egypt, the world's biggest importer of wheat, will strike Ukraine from its list of suppliers in 2013 after receiving notification of an export halt from Dec. 1, according to the government's main buyer.
The announcement was not a surprise following recent talk about export curbs by Ukraine, according to traders.
However, "the chances improve by the day that we'll actually do some business," Scoville said, referring to the United States.
U.S. exporters have lost out to the Black Sea on a string of international tenders recently, with Libya buying optional-origin wheat that was thought to be from Russia, and Jordan booking wheat thought to be from Ukraine.
European traders said on Thursday that Algeria bought at least 400,000 tonnes of optional-origin milling wheat that was likely from France.
There are also hopes for improved demand for U.S. corn, as rival global suppliers from South America and the Black Sea region, which have undercut the world's top exporter for months, are running low on supplies.
"It looks like future demand for corn and wheat is on the rise," Gerlach said.
Weekly U.S. grain export data, to be published on Friday, will offer further clues about demand for U.S. grains.
The USDA on Thursday said private exporters had struck deals to sell 32,000 tonnes of U.S. soybean oil to unknown destinations.
-- Tom Polansek
covers agriculture and the CBOT for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.