Soy retreats from 6-month high, wheat sinks (28-03-12)

US soybean futures were lower and down from a six-month high on Tuesday as traders booked profits ahead of highly anticipated crop reports due at the end of the week.

Soybeans for May delivery were down 9-1/2 cents, or 0.7 percent, to $13.70 a bushel by 12:50 p.m. CDT (1750 GMT) at the Chicago Board of Trade.

Wheat also came under pressure, with the May contract down 17 cents, or 2.6 percent, at $6.42-1/2 a bushel on lessening concerns that poor weather will hurt global production.

Talk of beneficial rain in the dry crop areas of western Europe weighed on wheat prices, said Jason Britt, president of Central States Commodities.

The outlook for the US crop brightened a bit, as well. The US Department of Agriculture rated 59 percent of wheat in Kansas, the country's top producer, as good or excellent, up from 54 percent a week earlier.

"There's been a little concern going back and forth on some of this weather," Britt said.

All the activity was overshadowed by uncertainty about USDA quarterly inventory and prospective plantings reports due on Friday. The department's estimates often cause wild price swings.

Traders took money off the table after soybeans had climbed on Monday on increasing concerns about drought reducing output in South America. Crop losses in South America have increased demand for US soybeans, with the US Department of Agriculture reporting private exporters struck a deal to sell 120,000 tonnes to top importer China.

In a move to even out positions ahead of the reports, some speculative traders were unwinding long soybean/short corn spreads, said Tim Hannagan, analyst for PFG Best.

"They made the spread (Monday) and bought the beans, sold the corn," he said. "Today they just unwound it as part of the balancing act. This is a week when funds don't want to add more risk to their longs."

The USDA will estimate soybean inventories as of March 1 at 1.387 billion bushels, up from 1.249 billion bushels a year earlier, according to a Reuters poll of analysts.

Corn traders also nervously awaited the data, as corn futures have tumbled by the daily trading limit on the day of the past three quarterly inventory reports.

"Everybody keeps staring out there at Friday's numbers and they get more and more confused about what they should see or not see," said Jerry Gidel, analyst for Rice Dairy.

The USDA's last quarterly stocks report on Jan. 12 pegged corn supplies as of Dec. 1 at 9.642 billion bushels -- 251 million bushels more than the average trade estimate for 9.391 billion.

The USDA on Friday is expected to estimate corn stockpiles at about 6.15 billion bushels, down from 6.523 billion a year earlier, according to the Reuters poll.

However, firm basis levels indicate inventories may be even tighter, said Jim Gerlach, president of A/C Trading.

"Everybody is just absolutely terrified of what the USDA might tell us on Friday," he said.

Corn futures were slightly lower, with the May contract sliding 3-3/34 cents, or 0.6 percent, to $6.34 a bushel. The market had been slightly higher in earlier dealings.