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

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By Tom Polansek

CHICAGO, Feb 5 (Reuters) - Chicago Board of Trade grain and soy futures back-pedalled from their highest prices in months on Wednesday as crop weather 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.

"They're starting to get rain down in South America," said Jim Gerlach, president of brokerage A/C Trading. "Weather is your driving factor today."

Most-active CBOT soybean futures Sv1 slid 18 cents to end at $10.57 a bushel, after hitting the highest price since late July.

CBOT corn Cv1 settled down 1-1/4 cents at $4.93-1/4 a bushel in a setback from an October 2023 peak. Wheat futures Wv1 dropped 4-3/4 cents to $5.72-1/4 a bushel, after hitting its highest level since October 2024.

Traders were assessing the potential for crop purchases by China, the world's biggest soy importer, amid uncertainty about the impact of a trade dispute with Washington.

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.

"China doesn't want another trade war because of their bad economy," Gerlach said. "They really can't afford it."