Minneapolis wheat futures sank Friday, while US corn futures stabilised as traders waited to see whether rains bring relief to parched areas of South America.
Spring wheat at MGEX dropped below $8 a bushel for the first time since July before paring losses.
Traders were selling MGEX wheat and buying Chicago Board of Trade and Kansas City Board of Trade wheat futures in intermarket spreads, traders said.
"It looks like funds that were long Minneapolis are getting out," said Adam Knosalla, broker at Frontier Futures.
MGEX March wheat ended down 2.1%, or 17-1/2 cents, at $8.01 a bushel.
Corn steadied as meteorologists dialed down expectations for rain in Argentina, the world's second largest exporter of the grain.
Prices fell sharply on Thursday on forecasts for badly needed precipitation.
"You don't really know how the weekend's going to be," said Jack Scoville, analyst for Price Futures Group.
Traders are paying close attention to Argentina's weather because some of the corn crop is in the critical pollination stage of development.
They project export demand may shift to the United States if South American farmers suffer serious crop losses due to dryness.
Key growing areas of Argentina will likely receive 1/2 to 1-1/2 inches of rain early next week, not the 1 to 3 inches some forecasters were predicting on Thursday, said John Dee, president of Global Weather Monitoring.
"Those that were buying into the 1 to 3 inches yesterday are the ones that are saying, 'Oh, no, no, it's not as much rain' now," Dee said.
Chicago Board of Trade corn for March delivery ended unchanged at $6.43-1/2 a bushel.
Informa Economics, a closely watched crop forecaster, on Friday became the latest firm to cut its estimate for Argentina's crop due to the weather.
It lowered its outlook 11% from December to 24 million tonnes, below the US Department of Agriculture's last estimate of 29 million tons.
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