Grains retreat on improved weather forecast
Category: Grains
(MarketWatch) — Corn, winter wheat, and soybean futures fell Monday after a stunning run higher in the past month, as investors and farmers reacted to a slightly-improved weather forecast for the Midwest and as other commodities also made losses.
Corn for September delivery (US:CU2), the front-month contract, lost 10 cents, or 1.3%, to $8.14 a bushel on the Chicago Board of Trade after closing at a record Friday. December corn (US:CZ2), the more active contract, was down 10 cents, or 1.3%, to $7.85 a bushel.
Corn futures, on a most-active contract basis, have gained more than 24% this month, according to FactSet data.
September wheat (US:WU2) settled down 30 cents, or 3.2%, at $9.13 a bushel on the CBOT.
Soybeans for November delivery (US:SX2), the most active contract, lost 64 cents, or 3.8%, to settle at $16.22 a bushel. The front-month August contract (US:SQ2), which settled at a record Friday, fell 59 cents, or 3.4%, to $16.98 a bushel.
“The forecast changed a little bit for the end of the week,” said Austin Damiani, a market analyst for Frontier Futures in Minneapolis. It’s “potentially a pattern change. We’re seeing a little bit more rain in the forecast here … the temperatures look like they’re going to cool off at the end of the week.”
Corn, wheat and soybean futures had jumped in the past month as high temperatures and low rainfall stunted crop growth and prompted forecasters, including the U.S. government, to slash yield forecasts. The National Drought Monitor, run by the U.S. Department of Agriculture, Department of Commerce and University of Nebraska-Lincoln, estimate that up to 85% of the country is experiencing drought conditions ranging from “moderate” to “exceptional.”
Temperatures across the nation are expected to cool slightly by the end of the week, according to forecasts by the National Weather Service. And while the forecast for much of the central Midwest, including Kansas, Oklahoma, Arkansas and Missouri, does not include rain, states surrounding the region are expected to get between a half inch to an inch of rain in the next 48 hours.
While the rain and somewhat cooler temperatures may be too little, too late for the corn crop, the fate of the wheat crop has yet to be decided.
“I think there is still some time for the rain to positively impact the wheat crop,” said Mitch Kasper, principal for Midwest AG Investors, in an email interview. “I think the wheat and beans have been trading down on the extended forecasts which show more precipitation.”
That chance for wheat to improve means that there’s uncertainty about the size of the wheat crop. That has piqued investor interest.
“We don’t know what the final yield’s going to be,” said Damiani. “If the soybean yield doesn’t stabilize… (we’re) looking at a potentially explosive situation.”
