US soybean and corn futures fell more than 2 percent to hit a one-week low on Monday, tracking a broader decline in commodities amid financial market concerns as US lawmakers got ready to vote on a $700 billion rescue package. Congressional leaders from both parties said they had reached a tentative agreement, but questions abound as to whether the rescue plan would restore confidence to shaky markets and head off a deep recession.
"The dollar is strengthening and oil is coming down - all these factors are bearish for grains," said Kazuhiko Saito, a strategist at Interes Capital Management Co in Tokyo. "The worry about the economy will continue to put downward pressure on grains."
By 0633 GMT, November soybean was down 2.32 percent to $11.37 a bushel, while December corn fell 2.16 percent per bushel. Saito said December corn could drop to a low of $5.20 per bushel and November soybeans to around $11.00 per bushel this week. "Corn and soybeans will lose more value as harvests will be starting in October."
The US dollar rose against the euro and oil slipped on Monday as a banking crisis worsened in Europe, while Asian stocks fell 2 percent on questions about the effectiveness of US plan to save the financial system from ruin.
The British government will take over mortgage lender Bradford & Bingley, people in the bank industry familiar with the matter told Reuters.A strengthening dollar makes prices of commodities quoted in dollars expensive for buyers. Oil influences soybeans and corn because of increasing use of grains in making biofuels, which compete with petroleum. A possible cold snap, which will slow maturation of corn and soybeans and prevent crops from drying down in the fields, could support prices.
USDA will release its quarterly stocks report and annual small grains summary at 8:30 am EDT (1230 GMT) on Tuesday. December wheat fell 1.43 percent per bushel, its lowest in more than a week, as weaker market sentiment outweighed concerns over dry weather in portions of Argentina and Australia. Argentina's wheat crop is deteriorating in many parts of the country's top growing region due to a persistent drought, the Agriculture Secretariat said.