Chicago Board of Trade (CBOT) soybean futures fell for the fifth day in a row on Monday, sliding to a one-month low on concerns about a bailout plan for euro zone member Cyprus -- and on availability of a large South American soybean harvest.
Wheat turned down for the first time in seven trading sessions and corn turned firm in a modest rebound after slipping earlier for the third consecutive session on risk aversion that boosted the dollar while weakening commodities and equities.
"The weak crude oil and strong dollar is leading to safe-haven investing and liquidation in grains," said Mike Zuzolo, analyst for Global Commodity Analytics.
"The Cyprus issue is showing (euro-zone) action isn't matching the words that were spoken last year, they're not out of the woods economically," he said.
Euro zone finance ministers want savers in Cyprus to forfeit a portion of their deposits in return for a 10 billion euro (US$13 billion) bailout for the island, which has been financially crippled by its exposure to neighbouring Greece.
The White House is monitoring Cyprus' plans, a White House spokesman said on Monday, but declined to comment further on the plan, which has rattled financial and commodities markets.
The decision, announced on Saturday morning, stunned Cypriots and caused a run on cash points, and led to fears of knock-on panic in other fragile euro-zone economies.
"The agricultural markets are feeling the heat because of risk aversion," said Joyce Liu, investment analyst at Phillip Futures in Singapore. "It was quite surprising to see the bank levy on Cyprus and there is fear that this might spread to other nations in the euro zone."
Chicago Board of Trade (CBOT) most-active May soybeans were down 16-1/2 cents per bushel at $14.09-1/2. May wheat was down 10-1/4 at $7.12-3/4 and May corn was up three, at $7.20 a bushel.
European wheat held up better, supported by weakness in the euro, with May milling wheat in Paris trading steady at 234.75 euros per tonne.
The nervousness over Cyprus added to bearish soybean fundamentals in the shape of all-time high Brazilian production and declining demand in the United States.
Last week, premiums over Chicago futures prices paid for soybeans at Brazil's Paranagua port turned negative for the first time in the 2012-13 crop year as the record harvest pressured prices.
Brazil is harvesting a record crop, which has been estimated by the government at 82.1 million tonnes, although there are concerns port congestion will hamper the export of a harvest that has been eagerly awaited to offset tight U.S. supply.
Argentina should produce 51-52 million tonnes of soybeans in 2012-13 and 27 million tonnes of corn, Agriculture Minister Norberto Yauhar told Reuters on Friday, forecasting an output increase from the previous season.
"There is lot of pressure on soybeans because demand for U.S. beans is waning," said Liu of Phillip Futures. "U.S. soybean crushing was well below expectations and exports are decreasing."
The National Oilseed Processors Association (NOPA) said the U.S. soybean crush in February fell to 136.322 million bushels, below trade forecasts for 141.6 million.
U.S. weather gaining traction
Crop weather in the United States was again gaining traction as a market factor following the worst drought in over 50 years that trimmed harvest from last year's crop.
Scattered showers are expected in the north and east U.S. Midwest early this week followed by drier and colder weather into the middle of next week, an agricultural meteorologist said on Monday.
"Temperatures will be below average, it's still too early to worry about delays in plantings but it is that time of year that you would rather have soils warming up," said John Dee, meteorologist for Global Weather Monitoring.
-- Sam Nelson reports on the CBOT futures markets for Reuters from Chicago. Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.