So much for beginning-of-October buying.

"Traders are also talking about 'new month, new money'. Are we going to see new fund money allocated to the grains this week, helping to support prices?" Steve Georgy at broker Allendale asked.

The answer was "not on Monday", anyway, as wheat dropped 2.2% in Chicago, with soybeans closing down 2.6%.

Nor could the declines be blamed on external markets, with risk assets, overall, enjoying gains, as firm US manufacturing numbers offset disappointment earlier at data indicating a continuing decline in China's factory sector.

In the US, the ISM index of manufacturing activity beat expectations, showing a return to expansion in September following three months of contraction.

And even a positive outlook from Goldman Sachs on prices, foreseeing \$10-a-bushel wheat and record corn and soybean prices ahead, could not save grains from losses.

'Gut slot of harvest'

One of the problems with soybeans was the ongoing harvest in the US, with some 40-45% expected to have been harvested as of last night – enough to signal huge supplies for buyers off the combine, but not enough to trigger ideas that this harvest pressure on values is about to wane.

"The soybean market is right where the corn market was two weeks ago as it prepared to go through the gut slot of harvest," Darrell Holaday at Country Futures said.

"That is a big factor in the weakness in the soybean complex."

At broker RJ O'Brien, Richard Feltes flagged a "wide open US harvest weather in the western Midwest", if with some wetter weather further east and south.

Yield upgrade?

And what is being harvested is coming off with a higher yield than had been expected.

"We continue to hear good bean yields and we could see the US Department of Agriculture revise their yield number higher late next week," Mr Georgy said.

"This may continue to put pressure on beans as this report gets closer."

We are, after all, talking about quite some upgrade.

"The trade is also building in a soybean yield up 2-2.5 bushels per acre," US Commodities said.

At Rice Dairy, Jerry Gidel, chief feed grains analyst, "people believe the USDA is going to raise the yield by 2.5-3 bushels per acre.

"That will not happen, at least not in one fell swoop. But that is what people are trading."

'Strong week for planting'

In fact, the market was offering a "big giveaway on protein", with November soybean futures ending 2.6% down at \$15.60 ¼ a bushel in Chicago, not far from a three-month low for a spot contract.

Protein itself, as in soymeal, finished down 2.6% at \$475.10 a short ton for December.

But if there were any investors thinking of placing long bets, they were further dissuaded by the revelation of a few deliveries against expiring October soymeal and soyoil contracts.

Furthermore, weather for sowing in Brazil is looking up, after a dry winter.

"South America will see a strong week for planting and as the weather maps stand now they should see rains follow right behind," Steve Georgy said.

"This is much better conditions than what was projected over the last few weeks."

Inventory reassessment

For wheat, weather was an issue too, with some hard red winter wheat areas, notably Texas, receiving better-than-expected rains over the weekend, so easing concerns that the summer drought would live on to dent 2013 harvests too.

Furthermore, "the rains in Australian wheat areas were more than expected over the weekend and that has brought some selling into the wheat market today", Country Futures' Darrell Holaday said.

And Jerry Gidel noted ideas from close analysis of Friday's inventory numbers, which in showing smaller-than-expected stocks sent prices soaring in the last session, that higher use in feed might not be the only dynamic at work.

Stocks seemed to be falling in Washington, a white wheat area, and some spring wheat areas where grain would not be expected to be readily used for feed.

This, from a stocks report noted for its difficulty to interpret let alone predict, could indicate consumption less sustainable than might have been thought.

Wheat for December ended 2.2% lower at \$8.82 ¾ a bushel in Chicago.

In Europe, Paris wheat for November dropped 1.2% to E262.50 a tonne, while its London feed wheat peer closed down 0.9% at £200.95 a tonne.

'Screaming buy'

And all this weighed on corn too, which was at the centre of Friday's rally, after USDA revealed that US inventories of the grain had fallen further than expected, below 1bn bushels, over 2011-12.

There was some semblance of harvest pressure, with crop progress later expected to show some 50-55% of US corn harvested, a little short of the kind of figure which typically precedes the discovery of an intermediate low.

Corn added all of 0.1% to its limit-up close to the last session, taking it to \$7.56 ¾ a bushel, some \$0.12 a bushel off its intraday high.

Not that all investors have given up hope for the market.

We still see Friday's crop report as a near-term game changer for the grains, at least in terms of stemming price erosion," Mr Feltes said, adding that he was "already hearing that producers are inclined to hold as much grain off the market as possible".

Country Futures Darrell Holaday said the "corn market is screaming buy" to judge by its strength compared with other crops, and intra-crop spreads.

'Short covering to do'

Still, for real gains, it was necessary to go to New York and raw sugar, which closed up 3.4% at a six-week high of 21.13 cents a pound for March delivery, in its first day as the spot position, boosted by short-covering.

At Sucden Financial, Thomas Kujawa clocked the talk that "Bunge took delivery of roughly 600,000 tonnes from Brazil and Argentina" against the expired October contract, which some took as bullish given the indication o demand.  

"But perhaps more interesting was the COT," the weekly investor positioning report from the Commodity Futures Trading Commission, the US regulator.

"The net fund/ speculative short position was reduced from around 31,000 to roughly 17,000 short as of last Tuesday.

"It's hard to guess what the funds are now, but we pretty much went sideways for the remainder of last week so we imagine they still have short covering to do."