Chicago Board of Trade (CBOT) agricultural commodities closed lower over the trading week which ended June 29, with soybean futures droping nearly 4 percent as investors turned to technical selling amid trade tensions.
The most active corn contract for July delivery fell 7 cents weekly, or 1.96 percent, to 3.5025 dollars per bushel. September wheat delivery went down 3 cents, or 0.59 percent, to 5.0425 dollars per bushel. November soybeans plunged 36.25 cents, or 3.96 percent, to 8.8 dollars per bushel over the week.
CBOT corn futures fell 7 cents amid worsening anxiety over global trade, and favorable U.S. weather to date. Crop ratings indicate yield potential of 180 bushels per acre, which along with concern over export moving forward has kept price deflated.
U.S. Department of Agriculture added 1 million acres to planted and harvested area in its June report. The new crop balance sheet will loosen slightly in July.
Analysts note that while concern on trade persists, the break has boosted ethanol production and blending further. Exports rebounded strongly from the prior week.
Gulf corn is competitive with South American origin through summer. There's also rising concern over yield in Russia and much of Central Europe.
Fundamentally the market is very much undervalued. But clarity over trade issues is needed. Rallies will struggle until U.S.-Chinese negotiations resume. In corn, risk centers on a collapse in sorghum export demand, and thus more competition for U.S. Plains feed use.
Wheat futures ended mostly lower. Harvest pressure is noted, as is the quality of this year's hard red wheat crop. Protein levels will be a multi-year high, and a greater amount of high quality wheat will be available in 2018.
Spring wheat acres expanded 600,000 from March intentions. Market focus also rests squarely upon Chinese grain imports, with NAFTA issues to follow soon after.
There's no doubt global trade flows are important, but non-U.S. production continues to slide. This week France's wheat crop was cut a sizable 4 million tonnes (10 percent) from previous estimates. Russian wheat production is pegged at 65-66 million tonnes. Production in Germany and Poland is unlikely to exceed that of 2017/18.
CBOT soybeans plunged over 36 cents as traders worried demand of U.S. soybean continues to remain weak amid trade tensions. Limited trade news and anticipation of large June 1 stocks also capped rallies through the week.
Friday's reports did not offer any major surprises, and confirmed record large stocks along with a slight increase in new crop acreage. After a quick and volatile trading response, soybean futures ended slightly lower for Friday and on the lows of the week.
Crop ratings on Monday are expected to be steady to possibly lower as widespread, hot temps look to put crops under stress this weekend and the heat looks to continue well into next week.
