(Updates with closing prices)
    * CBOT corn futures finish year down 40 percent
    * CBOT wheat posts biggest annual loss in 5 years
    * Soybeans post annual loss of more than 7 pct

    By Julie Ingwersen
    CHICAGO, Dec 31 (Reuters) - U.S. soybean futures fell to the
lowest level in a month on Tuesday on end-year liquidation and
improving prospects for a bumper South American crop, traders
said, and ended the year down more than 7 percent.
    Corn slipped to a two-week low and tumbled nearly 40 percent
for the year, its biggest annual slide on record, as a
	

		

			
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record-large U.S. harvest replenished global inventories
following a historic Midwest drought in 2012.
    Wheat prices closed higher after the spot contract on the
Chicago Board of Trade dipped below $6 a bushel for the first
time in more than 19 months, pressured by ample world supplies.
    At the CBOT, most-active March soybeans settled down
16-1/4 cents at $12.92-1/2 per bushel. March corn ended
down 1-1/2 cents at $4.22 a bushel, and March wheat 
finished up 4-3/4 cents at $6.05-1/4.
    Soybeans tumbled ahead of the New Year's Day holiday as
much-needed rains fell in crop areas of Argentina. Beneficial
rains also fell in Brazil, where the harvest of a likely
record-large soybean crop is under way in a few areas.
 
    Argentina should harvest 55 million tonnes of 2013/14 soy,
above the previous year's production of 48.3 million tonnes, on
an increase in the area planted with the oilseed, the Rosario
exchange said in a report on Monday. 
    Prospects for rising global soy inventories have hung over a
soy futures market that has been propped up by firm U.S. cash
values amid robust demand from China, the world's biggest soy
buyer.
    "South American weather is easy, and there is not a lot of
	

		

			
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trade," said Dan Basse, president of AgResource Co in Chicago.
    "It's worth noting that the soybean-corn (price) ratios are
out to record highs. Everybody sees the bear market in corn and
wheat, and they see soy as over-valued," Basse said.
    Soymeal posted the day's biggest percentage losses at the
CBOT, pressured by falling cash prices for dried distillers
grains (DDGs), a corn byproduct that competes with soymeal as a
protein source in animal feed.
    The U.S. cash market for DDGs plunged in the last week,
since China rejected two U.S. cargoes of the feedstuff after
detecting the presence of a genetically modified strain not yet
approved by Beijing. 
    As a result, U.S. supplies of DDGs are starting to build.
    "The back-up of DDGs in the United States is going to cause
some pressure and likely will affect meal prices also," Basse
said.
    Corn came under pressure this week after crop-friendly rain
fell over much of Argentina's corn- and soybean-growing region
over the weekend, and more rain is expected in the northern
two-thirds of the country. 
    "Rains in Argentina have pressured the price of corn and
soybeans. ... New rains are expected in Argentina this week,
	

		

			
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thus limiting the impact of high temperature on crops," French
analysts Agritel said in a market note.
    
    WHEAT POSTS BIGGEST ANNUAL DROP SINCE 2008
    Wheat edged higher on Tuesday on short-covering after
falling to its lowest level since May 2012. CBOT wheat 
finished the year down 22 percent, its biggest slide since 2008,
while spot wheat in Paris fell around 16 percent.
    Dealers said rising global stocks weighed on values. 
    Commodity funds hold a large net short position in wheat,
leaving the market vulnerable to short-covering at year's end.
    Bitter cold temperatures in roughly the northern half of the
U.S. Midwest this week may cause some wheat winterkill in areas
that do not have a blanket of insulating snow.
    "We'll definitely see an uptick in icing on rivers, and some
wheat in west central Illinois and northeast Missouri may see
some winterkill," said Don Keeney, meteorologist for MDA Weather
Services. 
    Keeney said Midwest temperatures would fall to zero degrees
Fahrenheit (minus 18 Celsius) or a few degrees colder by New
Year's Day. A slight weekend warm-up should be followed by
another round of extremely cold air next week.
    
    Prices at 3:23 p.m. CST (2123 GMT)     
                             LAST      NET    PCT     YTD
                                       CHG    CHG     CHG
CBOT corn            422.00    -1.50  -0.4%  -39.6%
CBOT soy            1312.50   -15.75  -1.2%   -7.5%
CBOT meal           437.70   -12.60  -2.8%    4.1%
CBOT soyoil          38.82     0.20   0.5%  -21.0%
CBOT wheat           605.25     4.75   0.8%  -22.2%
CBOT rice          1551.00     7.00   0.5%    4.4%
EU wheat           207.75    -0.25  -0.1%  -17.0%
                                                         
US crude             98.59    -0.70  -0.7%    7.4%
Dow Jones           16,577       72   0.4%   26.5%
Gold               1205.16     9.16   0.8%  -28.0%
Euro/dollar         1.3757  -0.0046  -0.3%    4.3%
Dollar Index       80.1510   0.1510   0.2%    0.5%
Baltic Freight       2277       30   1.3%  225.8%

 (Additional reporting by Nigel Hunt in London, Colin Packham in
Sydney and Michael Hogan in Hamburg; Editing by William Hardy,
Marguerita Choy and Leslie Adler)