Corn prices fell sharply Thursday on forecasts for drier weather in Western states, which could give farmers a chance to plant fields that have been soggy from spring rains.
End-of-the-month selling also appears to have driven down grain prices as investment funds sell off their holdings and take advantage of historically high prices.
Corn for July delivery fell 30 cents, the maximum amount allowed by futures exchanges, to settle at $7.2925 a bushel Thursday. Soybeans fell 31 cents to $13.535 a bushel.
Jason Ward, analyst with Northstar Commodity in Minneapolis, said his fund sold off grain contracts to lock in gains made over the last month. He suspected other funds did the same thing, depressing prices. Once corn prices fell as much as trading exchanges allowed, traders sold off bean contracts as well.
"We just simply wanted to take the profit off the table. You can't guarantee a good profit unless you take it," Ward said.
At the same time, forecasts of drier weather in Western U.S. states means farmers might finally start to get their crops into the ground. A unusually wet spring has delayed planting across much of the country. If the dry weather materializes, farmers could get out in their tractors and ease fears of a supply crunch later this year.
"We know these farmers have big machines, and we know they can put in a lot of corn in a little time," Ward said.
Chicken prices could also be affected by tornadoes that ripped through Alabama, destroying dozens of industrial poultry farms. Officials estimate about 200 poultry houses were destroyed, and another 180 were damaged. Each house can hold about 20,000 chickens.
There is not a major futures market for trading chicken because the industry is controlled big companies that own the birds and pay farmers to raise them. So there isn't a market where farmers sell their goods, as is the case with beans and corn.
Ward said traders watch prices at the wholesale level, where restaurants and cafeterias buy chicken from poultry companies like Tyson Foods Inc. Chicken prices have been depressed through the spring from weak demand, so it's unclear if the disaster in Alabama will take enough supply off the market to raise prices.
In other trading, gold and silver prices rose on inflation fears. Precious metal prices began to shoot up Wednesday afternoon after the Federal Reserve announced it would keep interest rates near zero for an "extended period." The Fed has kept rates at ultra-low levels since December 2008.
When traders worry about inflation, they typically shift money into futures contracts for hard assets like precious metals.
Gold for June delivery rose $14.10 to settle at $1,531.20 an ounce, while silver for May delivery rose $1.562 to settle at $47.52 an ounce.
Other metals also rose. July copper rose 1.7 cents to settle at $4.245 a pound, July platinum rose $20.70 to $1,839.90 an ounce and June palladium rose $17.20 to $775.30 an ounce.
Oil prices also rose on the Fed's interest rate announcement. Low interest rates have kept the dollar weak against other currencies. That has contributed to higher oil prices, since oil is priced in dollars. Oil tends to rise when the dollar falls.
Benchmark crude for May delivery rose 10 cents to settle at $112.86 per barrel on the New York Mercantile Exchange.
In other Nymex trading, heating oil fell 0.22 cents to settle at $3.2459 per gallon, gasoline rose 1.14 cents to $3.2459 per gallon and natural gas rose 1.57 cents to $4.627 per 1,000 cubic feet.