MarketsFarm –– Recession fears and harvest pressures weighed down grain prices on the Chicago Board of Trade (CBOT) for the week ended Tuesday and it’s unknown when the selloffs will end.
Wheat contracts took a tumble by about $1.40 per bushel during the week, while the August soybean contract dropped $1.3225/bu. to close at $14.3925 and the September corn contract fell 62.25 cents per bushel to $5.9225 (all figures US$). All of these prices were the lowest since February, weeks before Russia’s invasion of Ukraine began.
Both Brent and West Texas intermediate (WTI) crude oil have also recently slipped to their lowest prices since May as an exit of spec funds spills over into other markets.
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Terry Reilly, senior agriculture futures analyst for Futures International in Chicago, said there is widespread selling across most commodities as traders fear what’s on the horizon.
“With the widespread selling, I think a lot of that has to do with traders easing up on inflation fears and looking at a potential recession,” he said. “It’s really all money flow at this point.”
Reilly added that recent weather has been kind to grain crops in the United States. Along with good production estimates for corn and soybeans and improving growing conditions in Canada, prices have declined even further.
“We’ve got some good weekend rains and then additional rains over the last 24 hours across the U.S. Midwest,” he said. “The export demand for the U.S. hasn’t really lived up to expectations either… I think there’s a lot of slowing global demand.”
Reilly adds that there may still be room for grain prices to fall further.
“We could still see additional pull back in these markets. (We’re) below the 200-day moving average for some of these markets,” he said. “We could pull back to $7 or $7.25 (per bushel for wheat), but it’s going to take a while to get there. We’re going to have to see additional selling.
“The corn market could go back to $5.50/bu. and the soybeans could flirt with the $14/bu., but soybeans could be choppy in the near-term. I expect some volatility to be fairly high for the remainder of this week, maybe even into next week.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
