GRAINS-Soy hits 2-month low on South American competition; corn, wheat sag

Julie Ingwersen

(Recasts throughout; updates prices, adds quotes, changes byline; changes dateline, previous HAMBURG)

CHICAGO, Nov 26 (Reuters) - U.S. soybean futures fell to their lowest in more than two months on Tuesday on a mix of technical selling and export competition from South American supplies, traders said.

Corn and wheat futures also declined, setting back after rallying a day earlier.

As of 12:56 p.m. CDT (1856 GMT), Chicago Board of Trade January soybean futures were down 7 cents at $8.85-1/2 per bushel after dipping to $8.82-3/4, the contract's lowest since Sept. 11.

CBOT March corn was down 2-1/4 cents at $3.78-1/2 a bushel and March wheat was down 2-1/4 cents at $5.30-3/4 a bushel.

Soybeans fell nearly 1%, with the January contract on track for a fifth consecutive lower close as traders focused on South American supplies.

"China picked up upwards of 40 cargoes of South American soybeans last week, leaving the U.S. in the dust," said Terry Reilly, senior analyst with Futures International in Chicago.

Improving South American crop weather has also weighed on futures by bolstering soy production prospects for Brazil and Argentina.

Additional pressure stemmed from soyoil futures, which fell in sympathy as Malaysian palm oil futures slumped on expectations of lower imports by key buyer India.

Reilly put chart support in CBOT January soybeans at around $8.79, the 62% retracement point on a Fibonacci chart tracking the contract's rally from mid-May to mid-October.

"We keep on lowering our support levels in the January contract ... because we are just seeing a lot of fund selling," Reilly said.

Traders continued to monitor headlines about potential progress in trade talks between the United States and China, the world's top soy buyer.

The United States and China are close to agreement on the first phase of a trade deal, U.S. President Donald Trump said on Tuesday, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

Trump said Washington was in the "final throes" of work on a deal that would defuse a 16-month trade war with Beijing, but also underscored Washington's support for protesters in Hong Kong, a potential huge sore point with China.

CBOT corn futures were modestly lower but found underlying support as a winter storm this threatened to stall harvest this week in Nebraska, Iowa, Minnesota and the northern Plains.

The U.S. Department of Agriculture late Monday said the U.S. corn harvest was 84% complete, leaving 16% still in the field.

"The harvest progress report indicates more than 2 billion bushels of corn (is) still left," Reilly said. "The window is closing for harvest. So losses are seen limited in the grains a little bit, because of weather," he added. (Reporting by Julie Ingwersen Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore Editing by David Goodman and Tom Brown)