U.S. new-crop soybean futures fell more than two per cent on Monday as improving weather in the Midwest crop belt brightened crop prospects and helped trigger a round of fund long liquidation.
Wheat extended losses to six per cent over two sessions and fell to a near three-week low as fears of shortfalls in key global growing areas eased.
Corn futures fell two per cent on pressure from the approaching U.S. harvest and profit-taking from last week's record-high prices, although worries about supplies following this summer's historic drought underpinned the market.
Soybean futures at the CBOT tumbled on cooler temperatures and light rains in the Midwest that could boost prospects for late-planted soybeans.
"How much improvement we will get, we don't know, but probably in the deep southern areas and the northern areas the crop can benefit from the recent rainfall," said Anne Frick with Jefferies Bache in New York.
"I would suspect we are going to see an increase in crop condition ratings tonight, and I think that is being reflected in the prices," Frick said.
After the close, the U.S. Department of Agriculture said 30 per cent of the U.S. soybean crop was rated in good to excellent condition, up one percentage point from the previous week and in line with a pre-report Reuters poll of analyst expectations.
Ratings for corn, which have fallen for nine straight weeks due to the worst drought in 56 years, were unchanged at 23 per cent good to excellent -- also in line with trade expectations.
At the CBOT, most-active November soybeans settled down 43 cents, or 2.6 perc ent, at $16.00-3/4 per bushel (all figures US$).
September wheat fell 28-1/2 cents, or 3.2 per cent, to $8.56-3/4 a bushel. Benchmark December corn ended down 17 cents, or 2.1 per cent, at $7.92-1/4 per bushel.
Commodity funds were net sellers of 16,000 contracts of corn, 12,000 of soybeans and 7,000 of wheat, trade sources estimated.
Soybeans set back in spite of a big cut in USDA's U.S. 2012-13 soybean production and stocks estimates on Friday.
"We had a tepid response on Friday to the bullish numbers, and that says the market might be a little tired," Frick said.
The approach of the corn harvest, coupled with anecdotal reports that combines have already begun rolling in scattered areas of the Midwest, pressured corn futures. CBOT December corn has fallen nearly seven percent from its peak of $8.49, the all-time high for any corn contract, set on Friday.
USDA did not issue a figure on the progress of the corn harvest but said it expected to issue its first such figure in its next weekly report. The government said 10 percent of the corn crop was mature, ahead of the five-year average of three per cent.
"With harvest around the corner, or actually starting in some places, there is no sense of urgency to bid up for anything," said Bill Gentry, a broker with Risk Management Commodities in Lafayette, Indiana.
However, the market found underlying support and bounced off session lows, supported by the USDA's forecast on Friday for U.S. corn inventories to drop to a 17-year low by next summer.
The USDA last week slashed its estimate of U.S. corn production and cut its forecast of U.S. 2012-13 corn ending stocks to 650 million bushels, the smallest since 1995-96.
"We will continue to find strong underlying support off the tight balance sheet," said Shawn McCambridge with Jefferies Bache in Chicago.
Wheat under pressure
CBOT wheat fell on follow-through selling after the USDA on Friday raised its estimates for U.S. wheat production. The market was also pressured by smaller-than-expected cuts in global wheat production, especially in Russia, despite inclement weather dimming eastern Europe crop prospects.
Wheat prices have dropped for the last two weeks but are up more than 40 per cent since mid-June.
There have been persistent rumours that Russia could curb exports to preserve supplies, as it did in 2010 when its crops were devastated by a drought. But over the weekend Egypt, the world's biggest wheat importer, bought 120,000 tonnes of Russian wheat.
"The Russian sale to Egypt kind of takes the notion they are going to restrict exports off the board here, at least for the short term," McCambridge at Jefferies Bache said.
"If we see production areas remain very dry coming up to 2013-14 winter wheat planting season, and if they are aggressive on the front end of this export market, it could force the (Russian) government's hand to slow things down," he said.
-- Julie Ingwersen
covers agricultural commodities markets for Reuters in Chicago. Additional reporting for Reuters by Ivana Sekularac in Amsterdam and Naveen Thukral in Singapore.