U.S. corn futures plunged to a three-year low on Monday and soybeans fell the most since February to a five-week bottom after a government crop report surprised traders by showing larger-than-expected stocks of both commodities.
The declines at the Chicago Board of Trade capped corn's worst quarterly performance in 17 years and soybeans' poorest such performance in four years after the U.S. Department of Agriculture's quarterly stocks report.
USDA, in potentially one of the last reports issued before a possible shutdown of the U.S. government, estimated corn supplies at 824 million bushels and soybeans at 141 million bushels as of Sept. 1.
Analysts, on average, expected corn stocks at 681 million bushels and soybeans at 124 million.
The report came as U.S. farmers were in the early stages of harvesting a forecasted record-large corn crop and the fourth largest U.S. soy crop.
"Beans did not like the stocks number one single bit, dropping like a rock after the USDA numbers came out, hurt perhaps as much by bigger weekend yield numbers as by the stocks report," said Charlie Sernatinger, analyst at ED+F Man Capital.
The report also came just hours before a midnight deadline that could see the government shutting down due to an impasse over federal funding.
CBOT December corn finished 12-1/2 cents lower at $4.41-1/2 per bushel, a drop of 2.8 per cent -- the largest in a month (all figures US$). Corn shed about 8.2 per cent for the month and lost nearly 35 per cent in the quarter, the largest drop since 1996.
Soybeans for November delivery settled 38-3/4 cents lower at $12.81, declining 2.9 per cent for the day and 5.6 per cent for the month. The quarterly loss of about 18 per cent was largest since the third quarter of 2009.
Analysts and traders expected USDA to show tighter stockpiles after last summer's drought reduced yields in the U.S. at a time of growing global demand for the commodities.
"In the soybeans, I think people were genuinely scared that the situation could be even tighter than everybody thought it was, so you're seeing a much bigger reaction there," said Jack Scoville, analyst at the Price Futures Group.
The better stockpiles will help provide a cushion amid a late U.S. harvest. USDA, after the close of trading, said the corn harvest was 12 per cent complete, below the five-year average of 23 per cent. Soybeans were 11 per cent harvested, compared with a five-year average of 20 per cent.
Forecasts for largely dry conditions in the U.S. Corn Belt were conducive to harvest progress this week, with the benign weather outlook further weighing on futures.
Kansas City wheat bucks trend
CBOT December wheat eased 4-1/2 cents to $6.78-1/2, following declines in corn. Wheat gained 5.5 per cent in September for the best monthly gain since July 2012. The strong month helped lift futures to a 4.7 per cent quarterly gain -- the first quarterly rise in a year.
Smaller-than-expected wheat stockpiles bolstered Kansas City Board of Trade hard red winter wheat futures -- one of the few row-crop futures contracts to end higher. KCBT wheat ended 7-3/4 cents higher at $7.39. Futures capped the sixth straight day of gains and settled at the highest point since June 25.
The government said this year's wheat crop totalled 2.128 billion bushels, up 14 million bushels from its previous estimate and 20 million bushels more than analysts expected. But stocks of hard red winter wheat came in at only 744 million bushels, compared with trade estimates of 788 million.
The wheat market has been underpinned by strong demand from China and Brazil, which has helped take U.S. exports to more than half the USDA's target of 29.9 million tonnes just four months into the 2013-14 marketing year.
-- Michael Hirtzer reports on grain and livestock commodity markets for Reuters from Chicago.