"Our weather guy upped the rainfall coverage for Argentina beginning on Sunday to 75 percent from the previous 50 percent," said Dale Gustafson, analyst for Citigroup.
Dry weather in Argentina had held soy futures firm in earlier trading on Thursday.
CBOT soy closed 7 to 13-1/2 cents per bushel lower, with January down 13-1/4 at $5.97-3/4 per bushel. March was down 13-1/2 at $6.08-3/4.
Traders said some volatility could remain in soy futures on Friday and the fundamental focus remained the shifting weather patterns in South America.
Futures trading will close early Friday at 12:00 pm CST (1800 GMT), and remain closed through Monday because of the New Year's Day holiday.
Meteorlogix weather service said showers in Brazil over the next several days would retain good soy growing conditions but drier and hotter weather is expected by early next week.
In Argentina, hotter and drier weather is causing some concern about the fate of the soy and corn crops, Meteorlogix said.
Exports were quiet overnight. The market was still dealing with talk about China seeking soybeans. Export sources said at mid-week there was talk China bought a cargo of Argentine soybeans.
USDA early Friday will release its weekly export sales report and analysts expect last week's US soy export sales to total between 550,000 to 750,000 tonnes, above the previous week's tally of 504,100 tonnes.
Abundant stocks in South America were still cutting into export sales of US soy. Traders said plentiful stocks of soy continue to anchor the market. But traders were cautious sellers because index funds could begin buying soybean futures.
The nine-day relative strength index for March closed at 51. Technical traders view a reading of 70 or more as indicating an overbought market. Technical support in the January contract was at $6.02-3/4 per bushel and resistance was at $6.19-1/2.
Cash basis bids for soybeans in the Midwest were higher on Thursday as dealers boosted cash prices and country selling of soy was at a standstill.
Soymeal futures closed $2.50 to $4.80 per ton lower, with January down $4.30 at $198.10 per ton. March was down $4.80 at $197.80.
Soyoil was 0.17 cent per lb higher to 0.06 lower, with January up 0.06 at 20.90 cents per lb. March was down 0.06 at 21.16 cents. "I think oil was mostly technical but there was a little end-user buying with a few oil export tenders around," Gustafson said.
The CCC late this week said it was tendering for a total of 9,710 tonnes of soyoil for Peru and Guatemala.
Malaysian palm oil futures closed firm overnight. Traders in Kuala Lumpur said palm recovered early losses and traders expect the market to end the year above 1,400 ringgit in anticipation of a drawdown in stocks.
Traders said there was some position-squaring ahead of Friday, first notice day for deliveries on the January soy complex contracts.