U.S. soybean futures fell one per cent on Wednesday on technical selling and forecasts for welcome moisture in crop areas of Argentina, traders said.
The downturn in soybeans erased early gains and dragged down corn and wheat as well.
At the Chicago Board of Trade (CBOT), March soybeans settled down 14-3/4 cents at $14.37 per bushel (all figures US$).
March corn ended down 7-3/4 cents at $7.20-3/4 a bushel, dropping below the contract's 50-day moving average near $7.24.
March wheat fell 4-1/2 cents to settle at $7.74-3/4 per bushel, after hitting its lowest price since Jan. 15 at $7.72-3/4 in overnight trade.
Soybeans led the way down as chart-based selling accelerated when the most-active March contract fell below its 200-day moving average near $14.47.
Updated weather forecasting models that added beneficial moisture for crop areas of Argentina added pressure.
"The forecast was wetter (for Argentina) in the six- to 10-day today versus yesterday," said Dan Cekander, analyst with Newedge USA in Chicago.
Some traders also booked profits after rumours of renewed soy purchases by top global soy buyer China were not confirmed.
Wheat turns lower
U.S. wheat futures turned lower as soybeans and corn sagged, negating a fragile rally tied to concerns about dry weather in the southern U.S. Plains winter wheat belt.
Trade was choppy. CBOT March wheat's early slide to a one-week low extended a profit-taking sell-off from Tuesday, when the contract rose to $7.99-3/4 but failed to break psychological resistance at $8.
Drought worries underpinned the market, especially at the Kansas City Board of Trade, which trades in hard red winter wheat futures. That class of U.S. wheat is currently facing the biggest threat from persistent drought in the southern U.S. Plains.
"Yesterday there was talk of rain coming into the hard wheat belt, and this morning that rain is gone -- or if it's there, it's in the far eastern edge of the belt, and it doesn't do much for the primary producing areas," said Roy Huckabay of the Linn Group, a Chicago brokerage.
"The fact that the weather forecast went back to being questionable explains why Kansas City wheat is gaining on Chicago," Huckabay said.
The prevailing weather pattern in U.S. crop areas remains cold and mostly dry, although temperatures remain above damage thresholds, said Joel Widenor, a meteorologist for Commodity Weather Group.
Parts of the eastern Midwest should receive welcome moisture next week, aiding the soft red winter wheat crop, but little relief was expected for the hard wheat crop in the southern Plains.
Corn awaits ethanol numbers
Along with technical selling, corn futures were pressured by worries about a slowdown in the U.S. ethanol sector. Traders were awaiting weekly production and stocks data from the U.S. Energy Information Administration on Thursday, delayed by one day due to Monday's federal holiday.
The EIA's report last week showed U.S. ethanol production had slowed to a 2-1/2 year low at 784,000 barrels per day.
"I think they (grain traders) are afraid of another low EIA weekly production number, like last week," said Cekander.
"I think there is some slowdown here, and it certainly showed up last week. I think it's going to be similar again this week," he said.
-- Julie Ingwersen is a Reuters correspondent covering agricultural commodities markets in Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.