On Monday, U.S. corn futures plunged to their lowest in over three years, while soybeans slumped to a two-year low. This drastic decline was attributed to the sharp drop in crude oil prices, which had a ripple effect on agricultural markets. The correlation between energy and grain futures is evident in the utilization of corn for ethanol production and soybean oil for biofuels.

Apart from oil weakness, favorable rains in Brazil’s crop-growing regions also exerted downward pressure on grain prices. Analysts pointed to technical selling and the beneficial rainfall in Brazil as major contributing factors to the market’s bearish sentiment.

The most active corn prices (C_1:COM) on the Chicago Board of Trade closed at a disheartening -1.4%, with a value of $4.55 per bushel, marking the lowest price since December 2020. In parallel, soybean futures (S_1:COM) settled at -0.8%, reaching a mere $12.45 1/2 per bushel, and hitting the lowest price since December 2021.

Additionally, CBOT wheat (W_1:COM) experienced the day’s most substantial loss, with the front-month March contract ending at -3.2%, totaling $5.96 1/2 per bushel. This plunge followed the failure of the U.S. Department of Agriculture to confirm any new export sales to China, despite the active buying of large volumes in recent weeks.

Notably, ETFs such as (NYSEARCA:CORN), (NYSEARCA:SOYB), (NYSEARCA:WEAT), (DBA), and (MOO) were impacted by these lows.

Ample rainfall in Brazilian growing areas has prompted fund traders to anticipate short positions. This sentiment was echoed in the latest CFTC Commitment of Traders report issued on Friday.

On the meteorological front, the El Niño climate system is anticipated to wane as winter progresses, potentially signaling an ideal planting season in the U.S. in April. “The expectation is that it has peaked and that it will decline into the spring,” said StoneX’s Arlan Suderman.