U.S. grains: Corn, soy plunge on weather, broad commodities sell-off

CBOT wheat follows trend lower

CBOT July 2021 corn (candlesticks) with MGEX, CBOT and K.C. July 2021 wheat (green, black and orange lines). (Barchart)
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Chicago | Reuters — U.S. corn and soybean futures fell sharply on Thursday, pressured by outlooks for rain and cooler temperatures in the Midwest crop belt, as well as spillover from broad-based selling in the commodities sector, analysts said.

Wheat followed the weaker trend, with seasonal pressure noted from the U.S. winter wheat harvest.

Chicago Board of Trade July corn settled down its 40-cent daily limit at $6.33 per bushel (all figures US$). CBOT July soybeans ended down 118-3/4 cents at $13.29-3/4 per bushel while new-crop November soybeans fell 90-1/2 cents to $12.52-3/4, dropping below psychological support at the $13 mark for the first time since April.

CBOT July wheat finished down 23-3/4 cents at $6.39 per bushel after dipping to $6.37-1/4, the contract’s lowest since April 14.

Grains followed declines in crude oil and gold as the U.S. dollar rose sharply after the U.S. Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.

Commodity funds hold a net long position in CBOT corn, soybean and soyoil futures, leaving the markets prone to bouts of long liquidation.

“All these outside markets — the funds (are) just exiting. The charts, certainly in beans, meal and oil, look ugly,” said Dan Cekander, president of DC Analysis.

CBOT soybean, soyoil, soymeal and corn futures will trade with expanded daily limits for Friday’s session, the exchange said.

On the weather front, traders expect showers to bring some relief to dry areas of the U.S. Corn Belt over the next two weeks, improving production prospects.

“When the market sees rain in front of it, it extracts premium accordingly,” said Dan Basse, president of AgResource Co in Chicago.

However, severe moisture deficits suggest crop yields in key production areas remain at risk. Thursday’s weekly U.S. Drought Monitor, prepared by a consortium of climatologists, showed severe drought across 41 per cent of Iowa, the top U.S. corn producer and the No. 2 soy grower.

CBOT July soyoil fell by its expanded 5.5-cent daily limit to 56.57 cents/lb., nearly nine per cent on the day, as global vegetable oil markets, including Euronext rapeseed and Malaysian palm oil futures, retreated from all-time highs set in recent months.

Soyoil futures have faced pressure following news the U.S. Environmental Protection Agency is considering ways to provide relief to U.S. oil refiners from mandates requiring the blending of biofuels including soy-based biodiesel.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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