Oct. 26 (Bloomberg) -- Corn plunged the most since June and soybeans declined on speculation that growers in the U.S., the world’s largest producer and exporter of both, increased sales to take advantage of the highest prices since harvesting began.

On Oct. 23, corn touched a four-month high of $4.135 a bushel, up as much as 23 percent from Sept. 30, and soybeans rose to the highest level in two months. Both commodities rallied as Midwest rainfall slowed harvesting, which trailed the five-year pace through yesterday and threatened to curb yields.

“The run-up in prices was to encourage farmers to sell, and I think that has been accomplished,” said Greg Wagner, an AgResource Co. senior market analyst in Chicago. “We reached the upside objectives” for producer sales and for speculators to reduce bets on higher prices, Wagner said

Corn futures for December delivery fell 19.75 cents, or 5 percent, to $3.78 a bushel on the Chicago Board of Trade, the steepest drop since June 30. The most-active contract is down 7.1 percent for the year.

Soybean futures for January delivery fell 18.75 cents, or 1.9 percent, to $9.8875 a bushel, the steepest slide since Oct. 2. The most-active contract reached $10.2925 on Oct. 23, the highest price since Aug. 14.

Speculator Holdings

Hedge-fund managers and other large speculators increased net-long positions by 27 percent to 109,163 contracts in CBOT corn futures and options in the week through Oct. 20, the biggest bet on rising prices since June, Commodity Futures Trading Commission data show.

In soybeans, large speculators increased bets on higher prices by 18 percent to 43,097 contracts last week, the most in nine weeks, CFTC data show.

“There’s some profit-taking by the funds” after corn topped $4.05 a bushel last week and soybeans jumped above $10.20, Wagner said. “Market volatility will continue into the end of the month.”

About 20 percent of the corn crop was collected by Oct. 25, behind the 58 percent five-year average, the U.S. Department of Agriculture reported today. The soybean harvest was 44 percent done, compared with the 80 percent five-year average.

Prices also fell on speculation that more favorable U.S. weather in the first two weeks of November will firm muddy soils, allowing harvest equipment back into the fields from Texas to Ohio, said Dale Schultz, a Gottsch Enterprises commodity specialist in Hasting, Nebraska.

Weather Outlook

The weather will be warmer and drier in the first half of next month, said Joel Widenor, the Commodity Weather Group’s director of agricultural services in Bethesda, Maryland. The driest weather is forecast for the western half of the Midwest region, with some showers predicted in southern and eastern parts after Nov. 6, Widenor said.

Speculators and farmers stepped up sales because of “a more open forecast” after a storm system passes through parts of the region this week, Schultz said. “If the farmer had 14 days of harvest weather, he could get not only the beans done but get 3 percent to 5 percent of the corn harvested a day.”

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, followed by soybeans at $27.4 billion, USDA figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

Last Updated: October 26, 2009 16:22 EDT