Chicago | Reuters — U.S. corn futures slumped to new contract lows on Friday and wheat fell to a 3-1/2-month low with a seventh daily drop in eight trading sessions as a spike in new coronavirus cases beyond China fueled fears of a pandemic.
Soybeans also retreated, reversing course after three days of gains as equities and energy markets extended their steep sell-off as the fast-spreading virus raised fears of a global recession.
The most active soybean contract closed with a small weekly gain, but corn posted its steepest drop since early November while wheat ended with its sharpest fall in a year.
“There is a lot of panic out there,” said Terry Linn, analyst with Linn + Associates. “It’s the dominating feature to the markets.”
World equity and crude oil markets were headed for their worst week since the 2008 financial crisis as investors continued to fret over the risk that a coronavirus would become a pandemic and trigger a global recession.
Countries on three continents reported first cases of the coronavirus on Friday, underscoring the risk that an outbreak that began in China will cause worldwide disruption.
Chicago Board of Trade May corn hit a contract low of $3.65-3/4 a bushel but pared losses and closed up 1/4 cent at $3.68-1/4 (all figures US$). All corn contracts except spot March and the July 2021 contract posted fresh life-of-contract lows.
CBOT May wheat dropped 2-1/2 cents to $5.25 a bushel after earlier bottoming at $5.12-1/2, its lowest level since Nov. 18.
May soybeans fell 2-1/4 cents to $8.92-3/4 a bushel.
End-of-week and end-of-month short-covering limited declines, along with minimal deliveries against March futures on Friday, which is the first notice day for deliveries.
“The fact that there were zero deliveries for corn and soybeans and minimal numbers for the wheat contracts shows that right now the market feels that the futures are not overpriced versus cash,” said Rich Nelson, chief strategist with Allendale Inc.
Soybeans remain underpinned by news that Argentina suspended the registration of agricultural exports, seen as foreshadowing a rise in grain export tariffs that could reduce overseas competition for U.S. soy.
Grain traders are also watching for any sign of U.S. agricultural purchases by China as part of the Phase One trade deal. Under a recently announced program, Chinese importers can begin registering with the government for tariff waivers beginning next week.
— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.