(Recasts, updates with closing prices, adds new analyst quote)
By Mark Weinraub
CHICAGO, May 5 (Reuters) - U.S. corn and soybean futures fell on Thursday, with soy dropping 2 percent, on profit-taking by investment funds looking to lock in gains from recent rallies.
Wheat futures slid 1.8 percent to their lowest since mid-April, pressured by reports of strong crop prospects in the U.S. Plains and weak export demand.
Traders said investment funds liquidated 12,000 to 20,000 contracts from their long soybean position and 8,000 corn contracts.
"The market is starting to struggle a bit," said Karl Setzer, a market analyst at MaxYield Cooperative. "It needs something fresh. A bull market needs to be fed and we are just not feeding it right now."
Chicago Board of Trade July soybean futures settled down 21-3/4 cents at $10.12-1/4 a bushel.
Better-than-expected export sales pushed soybeans higher early in the session, but traders locked in profits after the market failed to break through the weekly high.
CBOT soft red winter wheat for July delivery was down 8 cents at $4.63-1/4 a bushel. K.C. July hard red winter wheat fell 5 cents to $4.52-3/4 a bushel.
The Wheat Quality Council estimated the average hard red winter wheat yield in Kansas, the top U.S. producer of the grain, at 48.6 bushels per acre following a three-day tour of the state. Scouts found that crop-saving rains last month should more than offset the impact of an earlier drought.
"Reports from the Wheat Quality Council tour are nothing short of breathtaking out of Kansas," Charlie Sernatinger, global head of grain futures at ED&F Man Capital, said in a note to clients. "Estimates of wheat production for the hard red winter wheat are going up by the hour."
Adding to the bearish picture, the U.S. Department of Agriculture earlier on Thursday said that weekly old-crop export sales of wheat totaled just 178,900 tonnes, down from 351,800 tonnes a week ago. New-crop wheat export sales of 140,000 tonnes fell below market forecasts.
CBOT July corn was off 3 cents at $3.73-3/4 a bushel. Technical support was seen at the 50-day moving average. (Additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London; editing by G Crosse and David Gregorio)