U.S. soybeans fell nearly two per cent on Wednesday, the biggest daily decline in a month, after data showed an unexpected slowdown in economic growth in top commodities buyer China, while traders cited rumours that beans from South America may be imported into the United States.
Wheat and corn futures also lost ground as investors locked in profits after big rallies in grains earlier this week at the Chicago Board of Trade (CBOT). Volume overall was thin as markets closed in Europe for the May Day holiday.
"The economic data came in a little lower than expected, and it's hurting demand ideas," said analyst Jack Scoville of the Price Futures Group brokerage in Chicago.
Manufacturing growth in China, which imports about 60 per cent of global soybean exports, slowed in April, raising fresh doubts about the economy after a disappointing first quarter.
The Chinese data as well as slowing economic growth and higher crude oil stocks in the U.S. sent benchmark crude oil futures down nearly three per cent.
"You've got crude down almost $3 -- that's tough to ignore," said analyst Rich Nelson of grains brokerage Allendale Inc. in McHenry, Illinois.
CBOT July soybeans fell 26 cents to $13.73 per bushel, dropping sharply after notching a one-month high on Tuesday (all figures US$).
Soy was further pressured by widespread rumours that hog and poultry producers in the southeastern U.S. were seeking to import cargoes of Brazilian beans due to tight U.S. supplies and bountiful harvests in South America.
"I haven't heard of anything done, but it definitely works to bring beans in," said Charlie Sernatinger, global head of grain futures at brokerage ED+F Man Capital, citing sharply lower Brazilian export premiums.
On Monday, corn, soybeans and wheat each posted their largest gains in weeks, leading a broad commodities rally tied to a weakening U.S. dollar.
On Wednesday, the dollar fell to the lowest level since Feb. 25 against a basket of currencies, making commodities priced in the greenback more attractive in world markets. But with estimates for plentiful global grain stocks and traders on holiday, there were fewer buyers.
"There's not a lot of fresh news so this looks more like profit-taking than anything else. There is a little better forecast for longer-term corn planting and farmers can really plant a lot of corn in a hurry when they have to," said Joe Hofmeyer, analyst for CHS Hedging in Minneapolis.
CBOT July wheat settled 10 cents, or 1.4 per cent, lower at $7.21 per bushel, while CBOT July corn eased 3-1/4 cents to $6.46-3/4.
Corn futures rebounded from larger losses earlier in the session and briefly turned higher after the U.S. Energy Information Administration said the ethanol grind last week averaged 857,000 barrels per day, the most since June.
"That's a fabulous number, and that brought the market right back," Scoville said.
Corn futures were also underpinned by expectations of further delays in what is already the slowest planting season in history.
Heavy rainfall and some snow across in the U.S. Midwest will push farmers, many of whom just began planting corn this week, from the fields in the coming days.
"Whether it is rain or snow, it looks like enough of it will fall in the western two-thirds of the Midwest to bring a halt to field work activity," said John Dee, meteorologist with Global Weather Monitoring. "It is going to be a bit of a struggle to resume next week."
Below-freezing temperatures are forecast in the western reaches of the U.S. Plains hard red winter wheat growing region, which could damage the behind-schedule crop.
Scouts on the annual Wheat Quality Council crop tour of top wheat-growing state Kansas on Wednesday said yield prospects in western Kansas are down significantly from a year ago due to drought with some fields expected to yield nothing.
-- Michael Hirtzer
covers ag commodity markets for Reuters in Chicago. Additional reporting for Reuters by Karl Plume, Mark Weinraub and Sam Nelson in Chicago.