(NASDAQ) – Grain and soybean prices dropped sharply as extended forecasts cooled for the Midwest, promising relief for U.S. crops after a bout of scorching heat descends on the Farm Belt this week.
Soybean prices fell to a more than two-month low, pressured by forecasts showing largely favorable conditions for the first half of August. Prices for the oilseeds have been buoyed in recent months by fears that hot, dry weather in late summer would curb crop yields, potentially reducing the size of the fall harvest. But weather models now show cooler temperatures returning to the Midwest in coming weeks, along with beneficial rains in six to 10 days.
“We make the beans in August so there’s still plenty of time for problems to emerge but as we receive more rains and get further along, the likelihood of a major disaster becomes a lot less,” said Jason Britt, president of brokerage Central States Commodities in Kansas City.
Traders on Tuesday were looking at less threatening August forecasts and asking “do we really need $11 [a bushel] beans,” said Mr. Britt.
Soybean futures for delivery in August fell 34 1/4 cents, or 3.2%, to $10.44 a bushel at the Chicago Board of Trade, the lowest closing price since May 9.
Corn prices declined as weather forecasts moderated, assuaging concerns that a hot, dry spell would harm yields for that crop. While temperatures are expected to reach 100 degrees Fahrenheit in parts of the Midwest this week, the U.S. corn crop is in good condition so far, and rainfall in Iowa, the largest corn-growing state, likely will temper the impact of coming heat.
Analysts said commodity fund managers on Tuesday likely were adding fresh bets that corn prices would fall, pushing the market lower as a more benign weather outlook fuels speculations that better-than-expected corn yields could help U.S. farmers harvest a bumper crop this year.
“If you’re going to put a dent in corn production you’re going to have to get some real heat and dryness started right now,” said Mr. Britt.
CBOT September corn declined 15 1/4 cents, or 4.3%, to $3.41 3/4 a bushel.
Wheat prices lowered, pressured by weaker corn and soybean markets and a higher U.S. dollar. A stronger dollar often is unfriendly for grain prices because it makes U.S. exports less affordable for foreign buyers.
