Chicago Board of Trade soyabean futures closed lower on Wednesday, falling close to three-week lows as speculators exited long positions before the end of the month, traders said.
The nervous selling was sparked by concerns about reduced feed demand as the deadly bird flu virus spreads across Asia, killing millions of chickens.
"The precipitating factor is probably concern about bird flu in Asia, especially now that is has been found in China.
That's a factor that could hurt Asian meal demand and Asia has been the engine of growth in demand for meal," said Anne Frick, an analyst with Prudential Securities.
CBOT soyabean futures ended 30-3/4 to 18 cents a bushel lower, with March down 30-3/4 at $8.04-3/4.
The market gapped lower on the open and found additional pressure when March fell below its 20-day moving average of $8.18 a bushel.
Selling intensified at the close, when March fell into a chart gap of $8.17-$8.01 left on January 12 during the day trading session.
Commodity funds sold about 7,500 soya futures, with Fimat Futures featured selling 3,500 March, traders said.
There was also lingering pressure from the Food and Drug Administration's move late on Monday to ban the use of animal blood and poultry litter only in cattle feed.
Traders were disappointed that the ban was not broader and that meat and bone meal was not banned from poultry and pig rations, which would boost soyameal as a protein source.
Forecasts for rain late this week in the dry areas of Argentina were bearish.
Hot, dry weather has stirred concerns that Argentine soya production might be reduced this year. But the soya market is still underpinned by the tight supplies and brisk demand which has allowed soyabean futures to recover from setbacks and often surge to new contract highs.
Cash basis markets in the US Midwest were steady to higher on Wednesday and farmer selling was slow. Cash merchandisers said farmers were holding off selling beans until prices rally to roughly $9 a bushel.
CBOT soyameal futures also gapped lower on the open, pressured by fund long liquidation. By the close the CBOT soyameal market was down $4.30 to $9.90 with March soyameal ending at $251.30, down $9.40.
The bird flu feed demand issue and FDA's new feed rules contributed to the sell-off.
The CBOT soyaoil market also ended lower on end-of-the-month liquidation of long positions by funds. Soyaoil futures closed 0.32 to 0.70 cent per lb lower, with March down 0.59 at 28.93 cents. Malaysian palm oil futures closed lower overnight.
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