Chicago | Reuters — U.S. grain futures plummeted across the board on Wednesday, as fears eased about the potential for rain damage to the wheat crop and forecasts of warmer temperatures in the U.S. Midwest opened a narrow planting window for soybean farmers.
The burgeoning U.S.-Mexico trade fight added pressure to corn futures, despite a Reuters report that corn has been excluded from Mexico’s official list of U.S. products that could be subject to retaliatory tariffs if across-the-board duties threatened by the Trump administration take effect.
Mexico’s growing livestock industry relies on millions of tonnes of U.S.-grown yellow corn annually and industry experts say it would extremely hard to quickly substitute the U.S. imports with corn from other nations.
“We’ve talked about the potential of corn tariffs and a limit on corn exports, but the market hasn’t really factored that in a big way,” said Ted Seifried, chief agricultural market strategist with Zaner Group. “This is a weather market, so everyone is trading on the weather.”
Wheat futures dipped to near a one-week low, as the world wheat market continued to take profits from the recent weather-related rally, traders said.
The market had been worried about crop damage after the recent heavy rains, but a recent U.S. Department of Agriculture report said U.S. winter wheat looked good and rain was forecast for the Black Sea region, which has faced hot and dry weather.
“This is a classic wheat-led rally being driven by the funds,” said Mike Zuzolo, president of Global Commodity Analytics. “The funds are back in control of this market.”
The most-active wheat contract on the Chicago Board of Trade closed the day down 2.96 per cent at $4.90-3/4 a bushel. It earlier hit a session bottom of $4.88-1/2, the lowest since May 30. In the previous session, wheat declined 2.4 per cent.
The most-active corn futures closed down 2.88 per cent at $4.14-3/4 a bushel, while soybeans settled down 1.39 per cent to $8.69-3/4.
Traders said corn was being pulled down by wheat and trade issues. News that U.S. feed operations in the Southeast are beginning to import South American corn also was seen as bearish for corn.
Reuters reported on Tuesday that Archer Daniels Midland and other grain traders were selling Brazilian corn to Smithfield Foods in the United States, where wet weather has reduced plantings.
One source said Smithfield likely ordered five to 10 corn shipments from Brazil, which are expected to be loaded onto ships between September and January.
Adding to the bearish outlook is U.S. President Donald Trump’s proposal to slap new tariffs on Mexican-made goods starting June 10, if Mexico does not halt the flow of illegal immigration, largely from Central America, across the U.S.-Mexican border.
Mexico is a top buyer of U.S. corn. Those tariffs would gradually rise to 25 per cent by Oct. 1 if Mexico does not satisfy Trump’s demands.
— Reporting for Reuters by P.J. Huffstutter in Chicago; additional reporting by Colin Packham in Sydney and Sybille de La Hamaide in Paris.