U.S. soybean futures tumbled 2.3 per cent on Friday after the U.S. Department of Agriculture raised its forecast for global supplies at the end of the September-to-August marketing year above trade expectations, as a cut to Argentina's crop was offset by a rise in Brazil's.
Corn pared earlier gains and closed lower on spillover weakness from sinking soybeans. The corn market also faced pressure as the government raised its outlook for U.S. and global ending stocks outlook by more than expected as high prices blunted demand for the grain.
Wheat ended close to unchanged. Prices initially climbed on a surprise drop in the U.S. ending stocks forecast, but struggled to hold the gains amid the declines in corn and soy.
"This U.S. soybean stock number is not that big of a surprise... Global stocks coming in at a little over 60 (million tonnes), that's actually a little bit bearish, and the market's reacting to that," said Sterling Smith, futures specialist with Citigroup.
USDA trimmed its U.S. soybean end-of-season stocks outlook to 125 million bushels, from 135 million a month ago, but raised its global ending stocks view 1.1 per cent to 60.12 million tonnes after a million-tonne drop in Argentina's crop was offset by Brazil's million-tonne gain.
"That leaves the soybean market feeling a bit bearish," Smith said.
Chicago Board of Trade (CBOT) March soybeans fell 34-1/4 cents to $14.52-1/2 per bushel in the steepest drop for a spot contract in 3-1/2 weeks. Losses accelerated as the contract fell below its 100-day moving average of $14.66-1/4 (all figures US$).
Spot soybeans ended the week down 1.5 per cent, its first weekly decline in five weeks.
CBOT March corn fell 1-3/4 cents to $7.09 a bushel. The contract has closed lower for six straight sessions and shed 3.7 per cent this week, its biggest weekly loss since September.
CBOT March wheat was 1/4 cent higher at $7.56-1/4 a bushel after earlier trading as high as $7.70-3/4. Prices fell 1.1 per cent this week, the third straight weekly decline.
Tighter U.S. wheat supply
An unexpected cut to projected U.S. wheat carryout was viewed as the bullish surprise in the report, but wheat futures struggled to hold on to earlier gains.
USDA said the stockpile of U.S. wheat at the end of the marketing year on May 31 will shrink to 691 million bushels, down from its previous forecast for 716 million bushels and the smallest in four years.
"That was a bullish kick in the pants by lowering carryout instead of increasing it for wheat. Traders were looking for a little build (in inventories) and instead the USDA added some feed demand," said Jim Gerlach, president of A/C Trading.
The market took USDA's adjustments to the corn balance sheet in stride as increases in U.S. and world ending stocks and a cut to U.S. exports had been expected.
Investors' attention will likely return to South American weather next week.
Rains forecast for dry areas of Argentina may help stem recent corn and soybean yield losses. Drier conditions will be needed in Brazil, where rains have stalled some early harvest activity and threatened to delay export loadings.
-- Karl Plume writes for Reuters from Chicago. Additional reporting for Reuters by Natalie Huet in London and Colin Packham in Sydney.