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A shift in sentiment about Europe's debt crisis and weak demand sent U.S. grain and soybean futures lower Monday.
The agricultural commodities had posted early gains Monday, but the rally fizzled as Europe's problems pushed the euro sharply lower versus the U.S. dollar.
Corn for December delivery at the Chicago Board of Trade ended down 6 1/4 cents, or 1.1%, at $5.80 1/4. The market had climbed as high as $5.92 in early trade.
Soybean futures also retreated, with disappointing weekly export inspections adding to the pressure. CBOT January soybeans closed down 9 1/2 cents at $11.26 1/4 a bushel, down 20 cents from the day's highs.
A drop in the euro during the session helped drive commodity prices lower, serving as a reminder that the optimism about Europe ahead of a Friday debt summit was purely speculative.
"We only have hopes going into the summit," said Rich Nelson, an analyst with Allendale. "We don't have facts yet."
Traders added that early gains had more to do with short-covering than any shift in supply and demand fundamentals, which are considered weak due to poor exports. Along with soybean exports, wheat export inspections Monday were also weak, traders said.
Corn export inspections were slightly better than expected, but traders said the outlook for exports generally was dim for corn and wheat, thanks in part to a flood of cheaper, feed-quality wheat from the Black Sea region and Australia.
Traders said the market lacks any fundamentals news, and they are looking ahead to Friday's supply and demand report from the U.S. Department of Agriculture.
"At this point we're floating around and waiting until Friday," said Jerry Gidel of North America Risk Management Services.
Many traders are expecting the government to increase its stockpile estimates due to weak demand.
Losses Monday were limited in soybeans by uncertainty about the South American crop, which need ample rains to ensure strong yields. In wheat, worries about crops in the Ukraine and the U.S. southern Plains are limiting losses.
CBOT December wheat ended down 13 1/2 cents at $5.98 3/4 a bushel. Kansas City Board of Trade wheat closed down 9 1/2 cents at $6.66 1/2, and Minneapolis Grain Exchange wheat ended down 7 3/4 cents at $8.48 1/4.
Analysts said the grains markets will remain vulnerable to shifts in sentiment on Europe's debt crisis, which will prompt caution as traders are wary of being on the wrong side of global events they can't predict.
