Analysts said that traders who bet on prices rising after a historic drought cut U.S. soybean production took profits on prior gains as cooler, wetter Midwest weather is expected to benefit soybean crops.

There is a general assumption in the marketplace that the improved forecast is stabilizing soy-crop conditions and maybe adding bushels to U.S. production, said Tregg Cronin, market analyst with brokerage Country Hedging in St. Paul, Minn.

The U.S. soybean crop is in its critical development stage, giving the crop time to offset some of the summer's historic droughts impact if rainfall is adequate. During the important growing phase, soy plants set their pods and fill them out with beans.

Further rains forecast this week also could benefit crops, Mr. Cronin said. "There is definitely a feeling we have already seen the worst from a historic U.S. drought, with potential for soybean yields to improve in subsequent government crop reports," Mr. Cronin said.

The U.S. Department of Agriculture on Friday cut its forecast for soybean crops 12% to 2.692 billion bushels from their July estimate, using a yield of 36.1 bushels an acre.

Chicago Board of Trade August ended down 53 1/4 cents, or 3%, at $16.56 1/4, and November soybeans settled down 43 cents, or 2.6%, at $16.00 3/4 a bushel.

Generalized profit-taking across grain commodities added to the lower-price theme, said Sterling Smith, futures specialist with Citigroup Global Markets Inc. in Chicago.

Traders that bet on prices rising were dissatisfied with the corn market's price performance Friday. After initially rallying to new record highs following a tighter supply projection by government forecasters Friday, prices closed below the prior trading session's intraday low.

"The price action, called a key reversal, is a bearish price signal on technical charts," Mr. Cronin said. Traders followed through on the selling in corn Monday, with expectations for reduced demand adding to the losses.

However, corn losses were limited by acknowledgement that while rains can aid soy production, the corn-crop size still can get smaller, Mr. Cronin said. Uncertainty surrounding the amount of acres that will be harvested in 2012 opens the door for further production cuts for corn crops, Mr. Cronin added.

CBOT December corn settled down 17 cents, or 2.1%, at $7.92 1/4.

U.S. wheat futures fell in tandem with corn and soybeans, garnering additional weakness from favorable yield reports from the spring wheat harvest.

CBOT September wheat ended down 28 1/2 cents, or 3.2%, at $8.56 3/4, KCBT September wheat ended down 25 cents, or 2.8%, at $8.68, and September MGEX wheat settled 24 1/4 cents, or 2.6%, lower at $9.11 1/4.

Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com