July 18 (Bloomberg) -- Corn fell, capping the biggest weekly drop in 12 years, after Argentina revoked escalating taxes on some grain exports, ending a dispute with farmers that disrupted shipments. Soybeans and wheat also dropped.

Argentine President Cristina Fernandez de Kirchner failed to win support on her tax plan from Congress. Farmers threatened to resume a four-month protest unless the decree on taxes was revoked. The country is the world's second-largest corn exporter. Futures are down 19 percent from a record in June.

``U.S. exports are going to drop, and Argentina's exports are going to go up,'' said Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa. ``There's a lot of fund liquidation going on here.''

Corn futures for December delivery fell 21.5 cents, or 3.3 percent, to $6.285 a bushel on the Chicago Board of Trade. This week, the price tumbled 11 percent, the most since July 1996.

The most-active contract still has jumped 84 percent in the past year, reaching a record $7.9925 on June 27, on surging demand for livestock feed and grain-based ethanol.

Soybean futures for November delivery fell 50 cents, or 3.3 percent, to $14.48 a bushel. This week, the price dropped 9.3 percent, the most since mid-March.

The price has still gained 70 percent in the past 12 months, reaching an all-time high of $16.3675 on July 3, on increased global demand.

Wheat Falls

Wheat futures for September delivery fell 5.5 cents, or 0.7 percent, to $8.04 a bushel, capping a 3.2 percent weekly decline. The price still has gained 29 percent in the past year, reaching a record $13.495 on Feb. 27, after adverse weather curbed production in 2007.

The U.S. Department of Agriculture has said Argentina will be the world's third-biggest producer of soybeans in the 12 months starting Sept. 1. The country will be the fourth-largest wheat exporter in the year that started June 1.

Argentine farmers had blocked roadways and storage depots in protest since the escalating taxes were announced on March 11. With roads and ports now open, shipments can resume at a normal pace, analysts said.

``There was tremendous uncertainty about where the tax rate would end up,'' said Dan Cekander, a senior grain analyst at NewEdge USA LLC in Chicago. ``If it reverts back and stays there, it'll open up selling from Argentina's farmers.''

Argentine growers made progress in planting this season's wheat crop in the past week and finished harvesting soybeans, the government said.

Wheat planting was 71 percent finished as of yesterday, compared with 60 percent a week earlier, the Agriculture Secretariat said. Producers had harvested 97 percent of the corn crop, up a percentage point from the prior week, the secretariat said.

Midwest Rain

The U.S. is the largest producer and exporter of corn and soybeans and the biggest shipper of wheat. Forecasts for favorable weather in growing areas helped send futures lower.

Rain may help corn from Nebraska to Illinois, and thunderstorms will aid spring wheat in North Dakota and Montana, Minneapolis-based DTN Meteorlogix LLC said in a report.

The USDA on July 11 forecast domestic inventories of corn will be 833 million bushels in the year ending Aug. 31, 2009. That was up from a June estimate of 673 million bushels. U.S. growers seeded soybeans on 74.5 million acres from April through June, up 17 percent from a year earlier, USDA data show.

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans, hay and wheat, government figures show.

----With reporting by Heather Walsh in Santiago and Eliana Raszewski in Buenos Aires. Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.

Last Updated: July 18, 2008 16:39 EDT