U.S. grain and soybean futures tumbled Monday on expectations improving Midwestern weather will encourage farmers to finish planting their crops.
Corn sank 22 cents, or 2.9%, to $7.32 a bushel, while soybeans lost 31 1/4 cents, or 2.2%, to $13.83 1/4 a bushel. July is the most actively traded contract month for each market at the Chicago Board of Trade.
Prices sank as famers were thought to have advanced plantings significantly since last week due to warmer weather. Conditions during the weekend were "great," said Taylor Smalley, analyst for Country Hedging, a brokerage in Minnesota.
The favorable conditions were a turnaround from persistent rains that had stalled plantings across the Midwest earlier this spring. They encouraged projections that farmers would not abandon as many acres as previously thought due to poor weather.
Traders predicted the U.S. Department of Agriculture, in a weekly crop report due at 4 p.m. EDT, would estimate corn was about 90% planted, up from 86% a week ago. Many estimated soybeans were at least 70% planted, up from 51% a week ago.
The report is "going to show one of its biggest jumps of the year" in planting, said Tim Hannagan, analyst for PFG Best, a brokerage in Chicago.
"The expectations are that anybody who intended to plant planted," he said.
Traders are keeping a close eye on planting progress due to concerns about low corn and soybean inventories. Farmers need to grow large crops to prevent supplies from dwindling further.
Conditions are expected to stay favorable for planting and early crop development. Hot, dry weather through eastern and southern areas of the Midwest early this week may allow for increased planting progress, said meteorologists at Telvent DTN, a private weather firm.
"The crop that has been planted is experiencing close to ideal growing conditions," according to a note from Minnesota-based brokerage firm Benson Quinn Commodities.
Improved weather in Western Europe added pressure to wheat futures, as rains benefited the dry areas of France and Germany. Soft red winter wheat for July delivery closed down 29 3/4 cents, or 3.8%, at $7.44 a bushel.
In other news, losses in crude oil weighed on the markets because ethanol is made from corn and biodiesel is made from soybean oil, traders said. Strength in the U.S. dollar was unsupportive to prices as it makes dollar-denominated commodities more expensive to foreign buyers.
July soymeal dropped 2.4% to 359.40 per short ton, while July soyoil lost 0.2% to 58.03 cents per pound. July oats fell 1.6% to $3.72 a bushel, and July ethanol slid 1.8% to $2.60 per gallon. Rice bucked the weaker trend, as the July contract climbed 1.9% to $14.74 1/2 per hundredweight.
At the Kansas City Board of Trade, hard red winter wheat for July delivery tumbled 2.7% to $8.90 a bushel. Hard red spring wheat for July delivery stumbled 1.7% to $10.42 a bushel.