By Kirk Maltais
--Wheat for December delivery fell 4.2% to $7.96 1/4 a bushel on the Chicago Board of Trade Thursday, dropping in response to the U.S. dollar index rising to a 20-year high.
--Soybeans for November delivery fell 2% to $13.94 3/4 a bushel.
--Corn for December delivery fell 1.8% to $6.58 1/2 a bushel.
Inverse Relation: CBOT wheat futures led row crops lower for much of the day. The source of the pressure is strength in the U.S. dollar, with the index trading on the ICE up 0.9%. Wheat has been the crop most reactive to U.S. dollar fluctuations, with a higher dollar making U.S. exports less competitive. "The U.S. dollar index has found a newer 20-year high, which has pressured the euro along with both exporter and importer currencies," said AgResource in a note. "The erosion of purchasing power in many grain importing countries leaves open questions regarding demand growth in crop year 2022/23."
Seasonal Norms: Overall, macroeconomic worries worked alongside the usual trend of pre-harvest price pressure to pull grains down. The upcoming Labor Day holiday is also a reason traders are pulling back, said Tomm Pfitzenmaier of Summit Commodity Brokerage in a note. "The last few three-day weekends have resulted in lower markets at the end of the holiday, so some traders may be positioning for that to happen again, " said Mr. Pfitzenmaier. The CBOT and USDA will be closed on Monday in observance of the holiday.
Potential Fallout: Anxiety is growing among grain traders over the state of affairs in Ukraine - where export corridor deal grain shipments are slow, and some worry about Russian aggression near Ukrainian nuclear plants could trigger a disaster. "Ukraine shipped more than 1.5 million metric tons of grain and product from three approved ports in August, riding through safe passage corridors on 65 ships - most of which were small," said Arlan Suderman of StoneX in a note - adding that this volume is only a quarter of what had been shipped at this time last year. If a nuclear catastrophe were to occur, then exports would likely be further limited on account of contaminated cropland, Mr. Suderman said.
Smashing Records: Following Pro Farmer's Midwest Crop Tour ending with a corn yield forecast of 168.1 bushels per acre, analysts are considering how high prices could go if Pro Farmer's outlook proves accurate. "A major production decrease could mean an extremely tight stocks to use ratio and would warrant a major price rally to slow demand," said Jon Scheve of Superior Feed Ingredients in a note. "If the yields are as low as the Pro Farmer estimates published last week, then prices will need to trade much higher, possibly to new record values." Scheve views $9 per bushel as a possibility in that scenario - which is 7% higher than the 2012 record of $8.39 per bushel.
Piling Up Expenses: Hormel Foods lowered its earnings guidance for the rest of its fiscal year, saying it expects higher transportation and raw material prices to persist. The Minnesota maker of spam now expects per-share earnings between $1.78 and $1.85, down from its previous range of $1.87 to $1.97 a share. Hormel raised its annual sales guidance slightly due to its price increases to between $12.2 billion to $12.8 billion from a range of $11.7 billion and $12.5 billion. "We view the majority of the escalated cost pressures we are currently absorbing as transient and likely to subside over the coming quarters," said CEO Jim Snee.
--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.
--The Chicago Board of Trade and USDA will be closed in observance of Labor Day on Monday. Both will reopen on Tuesday.
--The USDA will release its weekly grains export inspections report at 11 a.m. ET Tuesday.
--The USDA will release its weekly crop progress report at 4 p.m. ET Tuesday.
Patrick Thomas contributed to this article.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires