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WHEAT FUTURES (W) - CBR (FLOOR)/C1

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Soybeans Plummet on Weather and Economic Fears

06/17/2021 | 03:48pm EDT

By Kirk Maltais

-- Soybeans for July delivery fell 8.2% to $13.29 3/4 a bushel on the Chicago Board of Trade Thursday, dropping in reaction to both reports of rainfall in some U.S. crop-growing areas as well as concerns about inflation squeezing demand for U.S. grains.

-- Corn for July delivery fell 5.9% to $6.33 a bushel.

-- Wheat for July delivery fell 3.6% to $6.39 a bushel.

HIGHLIGHTS

Nosedive: Concerns about higher inflation set off a spate of selling across commodities, with grains posting deep losses Thursday, reversing the buildup by managed money funds of record-size positions in anticipation of supply issues for U.S. grains.

"An unprecedented money supply combined with expanded position limits amid inflation talk and fundamental risks set the stage for a volatile spring and summer," said Arlan Suderman of StoneX, adding that a series of news articles impacting both the supply and demand side of grains triggered a selloff in futures last week, extending into Thursday. "Prices continue to hit sell-stops as they fall, leading to more traders exiting positions while amplifying the downward move on momentum selling," said Mr. Suderman.

It's All About the Weather: Weather models have added additional rainfall to their forecasts, putting pressure on grain futures throughout Thursday.

"Improved weather conditions, uncertainty over U.S. fuel blending mandates and Chinese moves to target speculators and hoarding, are putting pressure on ag products," said Robert Yawger of Mizuho Securities USA.

According to DTN, showers seen in the Midwest this week have been isolated, with many areas still missing rainfall and remaining in drought conditions.

INSIGHTS

Crunch Time: High prices for U.S. grains appear to be finally making an impact on grain export sales, with sales being at the low end of trader expectations this week.

"The numbers all fell within the range of estimates, but once again generally reflect declining demand for our products," said Dan Hueber of the Hueber Report.

The slump in sales comes after grain traders discussed demand rationing, or sales of U.S. grains falling amid high prices and tight supplies for grains. Export sales reported by the USDA Thursday were low, erring on the low side of estimates provided by traders surveyed by The Wall Street Journal.

Hanging in the Balance: While rainfall hit certain crop-growing areas in the Midwest, other areas that sorely need the rain have been missed, said the American Society of Farm Managers and Rural Appraisers.

"Here in Iowa, which is corn and soybean country, growth stage and plant health are hanging in as of today, but light soils are showing stress and the crops are in danger of deteriorating quickly without significant rain," said ASFMRA President Dennis Reyman.

The rainfall that impacted other areas is a factor pushing grains futures to limit-down closes Thursday.

Domestic Slump: Grain shipments in the U.S. are down this week, according to data from the USDA. In its latest grain transportation report, the government says U.S. Class I railroads originated 21,352 grain carloads during the week ending June 5, down 16% from the previous week.

Meanwhile, barged grain movements totaled 819,200 tons, 27% less than the previous week.

The decreased domestic shipments comes after Thursday's export sales report showed low export sales of U.S. grains across the board.

AHEAD

-- The CFTC is scheduled to release its weekly commitments of traders report at 3:30 p.m. EDT Friday.

-- The USDA is due to release its weekly export inspections report at 11 a.m. EDT Monday.

-- The USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT Monday.

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

(END) Dow Jones Newswires

06-17-21 1548ET

Stocks mentioned in the article
ChangeLast1st jan.
CORN FUTURES (C) - CBR (FLOOR)/C1 -1.48% 550.5 End-of-day quote.13.02%
WHEAT FUTURES (W) - CBR (FLOOR)/C1 -0.69% 724.5 End-of-day quote.13.90%
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