U.S. soybean futures dropped in quiet trading on Thursday, pressured by declining export demand ahead of a key U.S. Agriculture Department report, traders said.
Wheat futures also fell, their first declines of the week, but losses were limited by concerns about harvest shortfalls tightening the global supply situation. Corn futures weakened in sympathy with wheat and soybeans.
USDA said early on Thursday that weekly export sales of soybeans were at their lowest point in 16 months. Net soybean export sales of 191,900 tonnes were well below forecasts for 600,000 to 800,000 tonnes and included a cancellation of 545,600 tonnes from an unknown country.
"Cancellations in export sales in soybeans certainly will not go unnoticed," said Greg Wagner, president of GWX - Ag Advisors. "It begs the questions as to whether or not the market's poor price performance ... might in fact partly reflect a nervousness regarding future cancellations."
At 9:46 a.m. CDT (1546 GMT) Chicago Board of Trade January soybean futures were 9 cents lower at $14.98 a bushel.
CBOT December wheat was down 2-1/2 cents at $8.91-1/2 a bushel and CBOT December corn dropped 1-3/4 cents to $7.42-1/2 a bushel.
A firm dollar, which makes investors less likely to stock their portfolios with risky assets such as grains and reduces the need to buy commodities as a hedge against inflation, added further pressure.
Volume was light as traders were reluctant to stake out new positions ahead of release of the USDA's monthly supply and demand report on Friday.
Analysts were expecting the government would boost its forecast of U.S. corn and soybean yields as field reports from harvest indicated that the damage from the worst drought to hit the Midwest in more than 50 years was not as bad as initially feared.
USDA also was seen cutting its global wheat stocks forecast for the second month in a row due to weather-related problems in key growing areas such as Ukraine, Australia and Argentina. Despite Thursday's decline, CBOT wheat was still trading near five-week highs due to expectations for renewed export interest in U.S. supplies.
"We have seen cash wheat markets strengthen because of quality concerns in Australia, Brazil and Argentina," said Brett Cooper, a senior markets manager at INTL FCStone Australia. "There is a view that these quality issues in the southern hemisphere will switch demand to the United States."
Australia, the world's second-largest exporter, is expecting a much smaller crop this year, with early harvest showing lower protein scales and poor yields. Traders said rains forecast over the nation's east coast could slow the harvest.
Asia's top buyers, who rely on Australia for the bulk of their milling wheat supplies, may be forced to import larger volumes of high-protein spring wheat from the United States and Canada.