GRAINS-US grains off highs with Fed in focus, soyoil down 2%

By Julie Ingwersen

CHICAGO, Sept 17 (Reuters) - Chicago corn and soybean futures sagged on Wednesday, retreating from multi-week highs on profit-taking and an uptick in the dollar, while a drop in soyoil futures added pressure, analysts said.

Wheat futures followed the lower trend, with forecasts for rains in the southern U.S. Plains adding to bearish sentiment.

As of 12:58 p.m. CDT (1758 GMT), Chicago Board of Trade December corn CZ25 was down 3-1/2 cents at $4.26 per bushel. November soybeans SX25 fell 7-1/4 cents, or 0.7%, to $10.42-1/2 a bushel, with December soyoil BOZ25 down 1.37 cents, more than 2%, at 51.97 cents per pound.

CBOT December wheat WZ25 was down 7 cents at $5.27 a bushel.

Grain futures fell as the dollar .DXY firmed ahead of a widely anticipated Federal Reserve interest rate cut . A firmer dollar tends to make U.S. grains less competitive globally. MKTS/GLOB

Soybean oil futures BOv1 posted the biggest percentage declines, pressuring soybeans, as market players digested Tuesday's biofuel blending proposal from the U.S. Environmental Protection Agency.

Soyoil futures had jumped on Tuesday as traders awaited guidance. But industry representatives said the agency's proposal, including a 45-day comment period, failed to provide clarity on how to reallocate biofuel blending obligations under the government's Small Refinery Exemption program. Soyoil is the main U.S. feedstock for biodiesel.

"The EPA is no closer to finalizing biofuel policy than it was this summer, leaving biomass diesel production on hold," StoneX chief commodities economist Arlan Suderman said in a client note.

CBOT wheat futures fell as forecasts called for showers that should recharge soil moisture in the southern Plains, where farmers are starting to plant the 2026 winter wheat crop.

"The rains in the forecast are going to be beneficial for winter wheat planting, more so than for the row crops," said Terry Linn, analyst with Linn and Associates in Chicago.