Chicago Board of Trade corn futures fell to a nearly three-year low on Thursday, pressured by talk that the U.S. government will cut its requirement for ethanol usage, traders said.
U.S. wheat futures also fell as Egypt, the world's top buyer of the commodity, canceled a tender for supplies. Soybeans edged higher on a mild short-covering bounce.
Corn faced additional pressure from the ongoing harvest of the U.S. crop, which traders said was coming in above expectations, and some profit-taking after prices rose in three of the previous four sessions.
"Corn is taking some heat," said Karl Setzer, grains analyst at MaxYield Cooperative in Iowa. "Even as we (harvest) what was considered the worst areas of the Corn Belt, where there was some concern, yields are still coming out about 20 to 25 bushels an acre better than what was expected."
CBOT corn for December delivery settled down 5-1/4 cents at $4.38-1/4 a bushel (all figures US$). The market found support at $4.35 a bushel, a price hit last week that was the lowest since September 2010.
Federal environmental regulators are expected to significantly reduce their biofuel blending mandates for next year, marking a historic retreat from an ambitious 2007 law, according to industry and trade sources.
The U.S. Environmental Protection Agency (EPA) is considering a proposal that would set next year's target for use of renewable fuels at 15.21 billion gallons, less than the 18.15-billion gallon 2014 target established in the law.
CBOT December wheat closed five cents lower at $6.85-1/2 a bushel.
Egypt's GASC, the main government wheat buyer, said on Thursday it had canceled a tender for wheat for shipment Nov. 21-30 due to high prices. GASC issued the tender Wednesday afternoon.
CBOT wheat has risen 7.2 per cent since the start of September.
Soybeans firmed following two straight days of declines, but the market came off its highs due to the drop in corn. Traders also said soybeans had trouble holding support above the 50-day moving average.
CBOT November soybeans were up 1/4 cent at $12.88 a bushel. Prices peaked at $13.02 during the session.
The harvest of soybeans also was accelerating but traders said field reports were variable.
"The discrepancy in the bean yields seems to be wider," said Jason Britt, president of Central States Commodities. "That is why the bean market still seems to be holding in here."
Traders continued to cast about for fresh fundamental news in the absence of reports from the U.S. Agriculture Department. The partial shutdown of the federal government left traders without the weekly export sales report for the second Thursday in a row.
Additionally, there will be no monthly crop report or world supply and demand estimates. USDA originally planned to release those closely-watched reports on Friday.
-- Mark Weinraub is a Reuters correspondent covering grain futures markets in Chicago.