U.S. wheat and new-crop corn futures sank to eight-month lows on Monday as melting snow eased concerns about persistent dryness in key growing areas of the Great Plains.
Dry weather linked to the worst U.S. drought in more than half a century has stressed hard red winter wheat since the crop was planted last fall and raised concerns about corn planting this spring.
However, warming temperatures in the drought-stricken Plains are melting piles of snow that accumulated during two blizzards in late February and "putting a lot of welcome moisture into the ground," said Don Keeney, meteorologist for MDA EarthSat Weather.
The improving moisture outlook raised hopes that farmers will harvest big crops that will help replenish tight supplies of grain.
"Optimism has gone up," said Jason Roose, president of Central States Commodities.
Chicago Board of Trade (CBOT) March wheat, the nearby contract, tumbled 2.4 per cent to $6.96 a bushel. May wheat, the most actively traded contract, fell 2.5 percent to $7.02-1/2 a bushel (all figures US$).
March corn slipped 0.2 per cent to $7.23/bu. December corn, which represents the crop that will be harvested next autumn, slid 1.2 per cent to $5.50-1/4 a bushel.
"What you have to ask yourself daily is, 'Is the drought getting bigger or smaller?'" said Don Roose, president of U.S. Commodities. "The last two weeks, the drought's been getting smaller. That's a headwind."
Export demand helped underpin nearby corn prices as supplies are tight following the drought.
Private exporters struck deals to sell 100,000 tonnes of U.S. corn to unknown destinations for delivery in the marketing year that ends Aug. 31, according to the U.S. Department of Agriculture.
Concerns about tight global soy supplies also helped boost soybeans as logistical problems have delayed shipments of the oilseed from Brazil, which is expected to be the top soy exporter this year, traders said. The delays have shifted some business to the U.S., they said.
Weekly inspections of soybeans for export were 40.3 million bushels last week, topping analysts' expectations of 30 million to 35 million.
Weekly corn export inspections of 15.7 million exceeded estimates of eight million to 13 million, while wheat inspections of 24 million were within estimates of 23 million to 28 million.
May soybeans gained 1.3 per cent to $14.62/bu.
Still, South America is expected to produce a massive crop.
Brazilian forecaster Agroconsult raised its forecast for record soy and corn crops, analyst Marcos Rubin said, citing favorable climate in the southern producing regions.
Brazil will likely harvest 84.2 million tonnes of soybeans, he said, up from the firm's 84 million tonnes forecast in January. The corn crop forecast was raised to 75 million tonnes, compared with 74.7 million tonnes previously, he said.
-- Tom Polansek writes for Reuters from Chicago. Additional reporting for Reuters by Sam Nelson in Chicago.