Chicago soybean futures rose on Monday, maintaining the one-month highs they reached on Friday following a reduction in the U.S. soybean crop estimate by the U.S. Department of Agriculture (USDA), as reported by media reports. The USDA’s revised forecast suggested a smaller crop, which provided support to soybean prices. Meanwhile, wheat prices fell sharply, pressured by forecasts of much-needed rain across the U.S. grain belts, which raised expectations for improved crop conditions. Corn also experienced a modest gain, continuing the upward momentum it established on Friday after hitting its highest price since June.

At 1103 GMT, most-active soybean futures on the Chicago Board of Trade (CBOT) rose by 0.6%, trading at $10.36-3/4 per bushel. Wheat futures, on the other hand, dropped by 1.9%, falling to $5.61-1/2 per bushel, while corn saw a minor rise of 0.1%, reaching $4.31-1/4 per bushel.

The USDA’s Friday report indicated that U.S. farmers planted fewer soybeans and corn this year than initially expected, primarily due to a dry spell that hindered crop growth. This downgrade in crop expectations pushed soybean prices to a one-month high, while corn reached a more than four-month high. However, despite the smaller-than-expected crop sizes, the overall supply of these crops remains substantial. The USDA still anticipates the second-largest soybean harvest and the third-largest corn harvest in U.S. history. This highlights the paradox of reduced yields, but still a relatively abundant harvest overall.

"Soybeans remain higher as the market continues to respond to the smaller-than-expected USDA production and yield estimates for the U.S.," said Matt Ammermann, commodity risk manager at StoneX. "However, the overall market remains volatile and unpredictable." He added that although the current outlook is for a smaller crop, a large U.S. soybean harvest is still expected, which could limit significant price increases. Regarding corn, Ammermann explained that prices are holding steady at around the $4.30 level, largely due to the USDA’s forecast that was somewhat unexpected in comparison to private estimates, which had predicted larger U.S. crops. With a more significant U.S. corn export program and an expanded ethanol grind, the U.S. could see its corn carryout stocks at levels similar to last year, despite the expected record crop.

The USDA's estimates for end-of-season supplies of both corn and soybeans indicate that these stocks will be the highest in five years, reflecting the overall large harvest. Furthermore, the USDA projected world wheat ending stocks above trade expectations, adding to the downward pressure on wheat prices.

Wheat prices also faced additional pressure as forecasts for rain in the U.S. this week raised hopes that much-needed moisture would ease concerns about crop development in key wheat-growing regions. While the rain could provide a much-needed boost, Ammermann pointed out that the stronger U.S. dollar could dampen the U.S. export outlook, further weighing on wheat prices. In summary, the market for grains remains volatile, with factors such as weather forecasts, USDA estimates, and currency movements continuing to influence price fluctuations.