By Kirk Maltais

--Soybeans for November delivery fell 4.3%, to $13.95 1/4 a bushel, on the Chicago Board of Trade on Friday, with traders maintaining a risk-averse approach amid the start of the third fiscal quarter.

--Wheat for September delivery fell 4.3%, to $8.46 a bushel.

--Corn for December delivery fell 2%, to $6.07 a bushel.

HIGHLIGHTS

Cautious Stance: While yesterday's USDA reports suggest that the supply picture for U.S. row crops remain tight, fund traders are still driving grains lower in their efforts to mitigate their risk exposure. "The fear of tightening Central U.S. banks has produced a 'risk-off' mentality in a host of asset classes regardless of market fundamentals," said AgResource in a note. For grains, this has continued into trading today. However, other assets like livestock and crude oil are posting gains today, suggesting that the hands-off approach to commodities isn't universal today.

Weak Indicator: Weak export sales reported by the USDA yesterday for U.S. soybeans and soy products is a factor applying pressure to them today, with the soy complex leading the general decline in agricultural futures. In yesterday's weekly export sales report, the USDA said that old-crop sales of soybeans were reduced by 120,200 metric tons, driven largely by the cancellation of 288,400 tons of previously announced sales to unknown destinations. New crop sales for the week only slightly offset this reduction, leaving the net total at 7,400 tons. Continuous soybean futures have now fallen below the $14 per bushel mark for the first time since mid-January.

INSIGHTS

Potential Upside: While steep selling commenced yesterday following the release of key USDA reports, the results of these reports still indicate that weather issues could propel prices back towards record levels, said Goldman Sachs in a note. "The lower-than-expected acreage highlights how the U.S. crop is heading into the critical phase of the growing season with no acreage-driven buffer to shield production from adverse weather events and lower yields," said the firm. "We believe the market is still under-pricing upside tail risks in corn and soy, even as we continue to see such risks moderating in our base case throughout summer."

Limited Risk: Corn Belt weather looks to have only a limited effect on grains futures in the short-term, although any sudden deviation may quickly change things. "There are plenty of risks with current fundamentals, but nothing to say that, yes, we're going to have a short crop--nothing to prove the Algos wrong," said Arlan Suderman of StoneX in a note. "Maybe that will change with the forecast models over the next couple of weeks, but not to this point." Mr. Suderman adds that a high pressure system over the Plains is shifting westward, with strong winds developing over the next two weeks.

AHEAD:

--The USDA and Chicago Board of Trade will be closed in observance of Independence Day, reopening on Tuesday.

--The USDA will release its weekly grains export inspections report at 11 a.m. ET Tuesday.

--The USDA will release its weekly crop progress report at 4 p.m. ET Tuesday.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

July 01, 2022 14:56 ET (18:56 GMT)

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