By Kirk Maltais


-- Wheat for March delivery fell 2.7% to $7.21 3/4 a bushel on the Chicago Board of Trade on Monday in response to an improved precipitation outlook in the U.S. Midwest as well as South America.

-- Corn for March delivery fell 1.4% to $6.66 3/4 a bushel.

-- Soybeans for March delivery fell 1% to $14.91 1/2 a bushel.


HIGHLIGHTS


Rejuvenation: Overall, grain futures were lower on selling in reaction to rainfall arriving in otherwise parched South American growing areas over the weekend.

"Beans took the biggest hit with South American crops seeing widespread and beneficial rains over the weekend by all accounts," said Matt Zeller of StoneX in a note.

Scattered showers are expected across Argentinian growing areas through most of the week, according to a forecast from DTN, while Brazil also receives more rain.


Leading the Way: Wheat futures led the grains complex lower in trading through the day as South American moisture in parched areas pressured the complex overall. But wheat in particular was pressured by better conditions seen for U.S. winter wheat crops.

"Ideas that recent moisture in both Plains and Midwest has helped revive U.S. winter wheat fortunes," Joel Karlin of Ocean State Research tells the WSJ.


On Vacation: Concerns about the strength of grains export demand once the Lunar New Year celebrations conclude in China also weighed down futures.

"Will they [China] be more aggressive in the Lunar New Year?" said Daniel Flynn of Price Futures Group in a note. "The market is coming in soft this morning and demand fears are keeping the bulls at bay."


INSIGHT


Going Deeper: After being on the rise earlier this month as fund traders added weather-related risk premium to futures, grains have been sliding in recent days, with the continuous contract for corn and soybeans now posting four consecutive lower sessions with Monday's close.

"The improved South American weather definitely took away any bulls story beans may have been clinging onto," Dan Hueber of the Hueber Report tells the WSJ. "Wheat did not have one to begin with and if wheat heads to lower to price itself as a feed, it will drag corn down in the process."


Distance to Travel: The true impact of a fully reopened Chinese economy has yet to be priced into commodities, said Goldman Sachs in a note.

The firm notes that the reopening of the country's economy and borders is expected to spur demand for several commodities, including crude oil, soybeans, natural gas and industrial metals.

"Despite the rally, our bullish reopening expectations in China are nowhere near reflected in current market prices especially if international travel continues to open up," the firm said.


AHEAD


-- The EIA is scheduled to release its weekly ethanol production and stocks report at 10:30 a.m. EST Wednesday.

-- The USDA is due to release its monthly Cold Storage Report at 3 p.m. EST Wednesday.

-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday.


Write to Kirk Maltais at kirk.maltais@wsj.com


(END) Dow Jones Newswires

01-23-23 1611ET