Corn, soybeans, wheat down on crop prospects

Chicago corn, wheat and soybeans fell on Wednesday on expectations for USDA forecasts that US farmers will increase plantings, especially of corn, and increase global grain supplies.

The U.S. Department of Agriculture's outlook conference on Thursday and Friday is expected to include a forecast that the US corn acreage in 2012 will be the largest since 1944, which could mean a record crop. There is also speculation large new soybean sales to China will encourage farmers to plant more beans.

"There seems to be continued positioning ahead of the USDA crop outlook this week rather than any specific new fundamental developments today," said Rabobank analyst Erin FitzPatrick. "The US corn acreage is likely to be very large, but it is still unclear what the soybean area will be."

"We are also seeing some spillover weakness from outside markets with crude oil down and also the dollar higher."

Chicago Board of Trade March soybeans fell 0.5 per cent to $12.64-1/2 a bushel by 1150 GMT , while March corn fell 0.4 per cent $6.26-3/4 a bushel. Chicago March wheat suffered from spillover weakness, falling 0.5 per cent to $6.29-3/4 a bushel.

The dollar index, which measures the greenback's strength against a basket of currencies, rose 0.2 per cent, making US-dollar priced commodities expensive for overseas buyers.

The stronger dollar was good for Europen Union export prospects. European benchmark wheat, Paris' March contract was up 0.2 per cent at €212.25 ($280) a tonne after slumping around 2 per cent on Tuesday.

The main market focus remained on US planting intentions, with big new US soybean sales to China a late factor.

"Gradually everyone is getting to realise that the deal between the United States and China will encourage farmers to plant more soybeans now," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.

Last week, a Chinese trade delegation signed deals to buy a record 13.4 million tonnes of soybeans, valued at $6.7 billion, meaning the United States will supply almost a quarter of the around 55 million tonnes that the world's largest soybean buyer will import this year.

"The demand from China is simply huge, and they are going to stay in the market, ensuring that there is always a good deal of requirement of American soybeans," Barratt said.

China inked the deal as US farmers begin preparing to plant their 2012 crop amid low stockpiles.

Barratt said forecasts of a large corn crop in the United States would also encourage American farmers to decide to plant more soybeans, especially when a severe drought has cut soy crops in rival South American exporting countries.

Crop prospects in Brazil and Argentina, which together make up almost half of the world's soybean output, have suffered from weeks of dry weather.