GRAINS-Soybean, corn futures fall on improving Argentina weather forecast

Updates with price setback in US trading session

By Tom Polansek

CHICAGO, Feb 5 (Reuters) - Chicago Board of Trade grain and soy futures backpedaled from their highest prices in months on Wednesday as weather forecasts improved in Argentina, analysts said.

Traders have been closely monitoring dryness in Argentina because it is the world's top exporter of soyoil and meal, the No. 3 exporter of corn, and competes with the U.S. for global sales.

Rain on Tuesday and Wednesday brought much-needed relief to crops in Argentina's central farming region, especially to soybeans, after high temperatures and little moisture in January, the Rosario grains exchange said.

Showers will also reach dry spots in northern Argentina in the middle of the month, according to Commodity Weather Group.

"Weather is your driving factor today, moreso than anything else," said Jim Gerlach, president of brokerage A/C Trading.

Most-active CBOT corn futures Cv1 were down 3-1/4 cents at $4.91-1/4 a bushel by 12:40 p.m. CST (1840 GMT), after earlier reaching the highest level since October 2023.

CBOT soybeans Sv1 were down 19-1/4 cents at $10.55-3/4 a bushel. They turned lower after hitting the highest price since late July.

CBOT wheat Wv1 dropped 6-1/2 cents to $5.70-1/2 a bushel, after hitting its highest level since October.

Traders were assessing the potential for demand for China, the world's biggest soy importer.

Agricultural markets had feared that tariffs proposed by U.S. President Donald Trump against Canada, Mexico and China could hurt demand for U.S. farm goods in a tit-for-tat trade battle.

Trump on Monday postponed tariffs against Mexico and Canada for a month, while Beijing announced limited retaliatory tariffs on U.S. goods on Tuesday that did not include crops.

Some traders predict that China may boost purchases of the oilseed from the United States as part of trade negotiations.

In a sign of weak Chinese demand, trade sources told Reuters that China had delayed imports of up to 600,000 metric tons of mostly Australian wheat and offered some of those cargoes to other buyers.