U.S. corn fell for a fifth straight session on Thursday and hit a four-week low as Brazil's government forecast a record-large harvest this year, suggesting U.S. exports would face another year of stiff competition from the world's No. 2 supplier.
Soybean futures rebounded from earlier declines after the U.S. Department of Agriculture reported stronger-than-expected export sales last week, but struggled to hold those gains on forecasts for a massive South American harvest.
Wheat drifted lower with corn, falling for the fifth time in six sessions amid forecasts for more precipitation in the drought-stressed U.S. Plains wheat belt next week.
Trading volumes were modest as the market awaited Friday's monthly USDA supply-and-demand report.
"With our tight old-crop bean situation, there's concern that we could see some balance table tightening with higher crush and maybe export numbers. The corn is the other side with some fear that we might see lower exports," said Don Roose, president of U.S. Commodities.
USDA was expected to raise its end-of-season corn stocks estimate on Friday amid slumping demand from exporters and ethanol makers, but the stockpile was likely to remain at a 17-year low.
USDA's U.S. soybean stocks forecast, however, was likely to be lower as high prices have not yet sufficiently rationed demand from domestic processors and the export sector.
"It's a report trade, but the export sales kind of bubbled to the top this morning. Old-crop bean sales were probably double what the trade was thinking," Roose said.
Soy sales soar
Net soybean export sales last week jumped to a three-week high. Reported sales to China, the world's top importer of the oilseed, exceeded 1.3 million tonnes, and were the most for a single week in nearly a year, according to USDA data.
Corn export sales, however, continued their months-long slump, dipping to a one-month low of a net 160,400 tonnes, just a fifth the size of sales in the same week last year.
USDA last month forecast U.S. corn exports in the current marketing year at 950 million bushels, a 41-year low, but many traders and analysts expect that outlook to shrink further, possibly on Friday.
Stiff competition from Brazilian corn exports has diluted U.S. export dominance this season and another massive crop from the South American ag powerhouse suggested U.S. sales may continue to slump.
"It looks like Brazil has another whopper of a crop coming on. It's a big deal because if we can raise a decent corn crop this fall, even 13.5 billion bushels, you start to talk about that (U.S. corn) carryout really jumping for 2013-14," said Brian Basting, commodity research analyst at Advance Trading.
Brazil's government's crop supply agency, Conab, raised its corn crop projection on Thursday to a record 76 million tonnes, up from the previous year's then-record 72.7-million haul.
Conab also raised its soybean production outlook to 83.4 million tonnes, the most ever, up from its January forecast of 82.7 million tonnes.
Chicago Board of Trade March soybeans shed 3/4 cent to $14.86-3/4 per bushel, while new-crop November fell 12 cents to $13.24/bu. (all figures US$).
CBOT March corn fell 11-3/4 cents, or 1.6 per cent, to $7.10-3/4 a bushel in the steepest price drop in seven weeks. Technical selling accelerated the market's break as March futures fell below the 50-day moving average of about $7.22.
CBOT March wheat fell 5-1/2 cents, or 0.7 per cent, to $7.56/bu.
Wheat prices drifted lower as scattered rains fell from central Kansas to the mid-Mississippi River valley on Thursday, with more precipitation expected over the next 15 days.
Snow was forecast for the Northern Plains in the near term, which could offer some relief to the drought areas in western Nebraska, South Dakota and Minnesota, while better rains were expected in the Southern Plains in the six- to 10-day period, the Commodity Weather Group said in a daily report.
-- Karl Plume writes for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen.