Technical analysts had warned of a potential break-out by corn and soybean futures, which had traded as they ran into congestion on moving averages lines.

If US Department of Agriculture data last week had initially suggested that the trend would be for an upward move, sharp losses in Chicago on Monday, adding to those in the last session, made that move look like a false start.

Once Chicago's November soybean contract traded beneath its recent low of \$15.04 a bushel, investors pushed lower to find the next floor, and found very little resistance for another \$0.20 a bushel or so, moving into the \$14s a bushel for the first time in months.

"Soybeans traded down to fill a portion of the gap left between the trade dates of July 3 and July 5," Benson Quinn Commodities said.

'Unloading their long positions'

Indeed, the November lot ran down to \$14.85 ¾ a bushel, actually the lowest for the oilseed on a continuous chart since late June before recovering some ground in late deals.

The contract stood 1.9% lower at \$14.93 a bushel with 20 minutes of trading to go in Chicago.

The lot got into a bit of a vicious circle as selling worsened its technical picture which only encouraged further selling by funds and speculators which still retain a hefty net long position in the oilseed, by historical standards.

"The fundamental support from tight row crop supplies has not provided enough support to offset the effects of long liquidation," Benson Quinn said.

US Commodities said: "Funds are now unloading their long positions.

"As of last Tuesday funds were long 177,000 contracts of soybeans and long 260,000 contracts of corn. It is this long position that is short-term pressing the market lower."

Export divergence

At RJ O'Brien, Richard Feltes said it was also "interesting to note that several crop scouts believe the USDA is still understating the US soybean yield", even after an upgrade last week.

After all, upgrades in October USDA Wasde reports have a habit of leading to others,

Still, it was actually corn which ended up faring worse after soybean investors at least managed to pull some bullish sentiment from weekly US export data.

Cargo inspection data showed the US shipping 57.8m bushels of the oilseed in the week to last Thursday, up from 45.7m bushels the week before, and 45.3m bushels a year ago.

For corn, cargo inspections came in at a soft 17.2m bushels, down a touch week on week, and 4m bushels year on year.

US vs South America

The data touched a raw nerve, coming amid widespread rumours of yet more imports by US livestock feeders of South American corn, and this time from Argentina instead of/as well as Brazil.

At Allendale, Paul Georgy, noting speculation of further imports of 1m tonnes, flagged that US corn was priced at \$7.78 a bushel in Toledo, \$8.39 a bushel in the Gulf and \$7.08 a bushel in Argentina.

"It is pretty easy to see why corn is being brought in," he said.

"They normally pull grain from the eastern Midwest which is one of the hardest hit areas by the US drought."

Benson Quinn said: "The fact that feeders are securing coverage in the corn market by importing South American supplies is a burden on the corn market."

Corn for December stood 2.1% lower at \$7.36 ¾ a bushel.

'Significant yield losses'

In fact, wheat's US export data were the worst, reaching a miserable 7.0m bushels, down nearly one-half week on week, and more than one-half year on year.

And decent rains across the southern Plains over the weekend added to pressure, improving conditions for sowings of winter crop.

Still, the grain continued to gain support from the worsened conditions in Australia, where "local crop concerns may again come to the fore once after much of New South Wales received its coldest consecutive October mornings in over 10 years over the weekend," Commonwealth Bank of Australia's Luke Mathews said.

"Frosts at this time of the year have the potential to cause significant yield losses to wheat crops."

'Rain outlook is poor'

Furthermore, "despite light showers over the weekend, inadequate October rainfall means Western Australia yield potentials have trended lower over the past fortnight.

"The rain outlook is also poor."

Wheat for December limited its decline to 1.1% to \$8.47 ½ a bushel in Chicago.

In Paris, wheat edged 0.1% higher to E259.00 a tonne, while London wheat for November edged 0.3% lower to £199.00 a tonne, as traders digested estimates that the UK would return to being a net importer of the grain for the first time in 11 years.

Price supports

The generally lower trend, by the way, does not imply that all hope for the crop rally is lost, and with Tuesday of course the traditional day of turnarounds in Chicago.

The USDA flagged the potential for renewed upward momentum in soybean prices, once harvest pressure eases.

Separately, broker Doane said that while "heavy farm selling tied to harvest will continue to pressure grain futures, traders are monitoring weekly harvest progress reports and cash basis trends in the countryside for signs the farmer selling is abating and that the balance of the harvest may be going into storage rather than into market channels".

It also flagged that "attention is building on ominous weather forecasts for the 2013 outlook for crops in the US Northern Plains and Canada where it's getting quite dry and a warmer-than-normal and drier-than-normal winter may limit critical spring snowmelt soil moisture recharging".

India factor

Declines in Chicago were actually in tune with the broader commodities complex, which lost ground after weak Chinese data on loans offset better inflation and trade data to keep nerves alive over the country, a huge buyer of raw materials.

The CRB commodities index was 0.7% lower in late deals.

Raw sugar did its bit to depress the complex, falling 1.0% to 19.85 cents a pound for March delivery, after India said it would allow exports for a further year, easing concerns over supplies of the sweetener in the country after a weak monsoon damaged cane hopes in some areas.

Indeed, India is believed the source of much of the talk of ditched import purchase orders by end users which have also dogged the market in recent days.

Nick Penney at Sucden Financial flagged "rumours of washouts of recent physical purchases by two of the world's main consumers: India and China.

"With internal prices in India weaker, it seems the washouts have occurred because profit margins have therefore eroded or disappeared."

Ethanol vs sugar

Data showing a large speculative net long position, implying unfulfilled selling pressure, also hit values.

In fact, "the market will probably need to test lower levels and maybe even the much discussed ethanol/sugar parity, estimated 17-18 cents a pound, before final buyers are persuaded to step in", Mr Penney said.

Meanwhile, arabica coffee ended dong 0.5% at 160.85 cents a pound in New York for December delivery, sunk by observations too of limited demand despite the lowest prices in a month or so.