U.S. soybean futures closed lower Tuesday, extending a recent decline as market participants exited positions to reduce risk ahead of a key government report due Thursday.

Soybeans for July delivery fell 27 1/2 cents, or 1.9%, to $14.38 1/4 a bushel at the Chicago Board of Trade. July soybean meal fell $9.20 to $417.30 a short ton, and July soybean oil fell 0.31 cent to 53.27 cents a pound.

The decline in soybeans adds to a fall that began last week, when futures traded at a nearly four-year high.

The U.S. Department of Agriculture is due to release its updated world supply-and-demand tables Thursday morning, with forecasts for items such as domestic inventories of major crops like soybeans.

Soybeans still have a strong supply-demand outlook thanks to drought-provoked lower production in South America, and consistent export demand from China. But some market participants are wary of holding positions going into the USDA report, which could cause substantial price swings in agricultural commodities.

The selling Tuesday was also driven by technical considerations and weak outside markets, traders said.

More selling was sparked when July soybeans fell below their 21-day moving average and when November soybeans fell below their 40-day moving average, said Chad Henderson, analyst with Prime Ag Consultants in Wisconsin.

The soybean market currently has a large concentration of speculative long bets, and a relative lack of short positions makes it more vulnerable to a price drop than usual, traders say.

Traders Tuesday morning shrugged off a USDA announcement of more soybean export sales to China. It was the eighth consecutive trading day on which the USDA reported a sale to China or "unknown destinations," which traders usually assume means China.

The USDA Tuesday reported soybean export sales of 225,000 metric tons for delivery to China, including 60,000 tons for delivery in the current marketing year. The rest will be delivered in the next marketing year, likely using the "new crop" supplies that are just being planted in the U.S.

"This export business, especially new crop, it just seems like it's too far out to offer more support," Henderson said.

Corn futures rose on strong cash markets, with cash prices for exporters in the U.S. gulf region continuing to climb. July corn rose 3 cents to $6.23 a bushel.

Wheat also closed higher, lifted by the rise in corn and by short covering ahead of the USDA report.

CBOT July wheat rose 3 cents to $6.15 a bushel. Kansas City Board of Trade July wheat rose 4 3/4 cents to $6.36 a bushel, and MGEX July wheat fell 3 1/2 cents to $7.32 1/2 a bushel.

-By Owen Fletcher, Dow Jones Newswires; 312-750-4120; owen.fletcher@dowjones.com
(END) Dow Jones Newswires
May 08, 2012 15:51 ET (19:51 GMT)
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