Soybeans Drop in Risk-Off Trade -- Daily Grain Highlights
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
--Wheat for September delivery fell 4.3%, to $8.46 a bushel.
--Corn for December delivery fell 2%, to $6.07 a bushel.
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
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
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.
--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 firstname.lastname@example.org
(END) Dow Jones Newswires
July 01, 2022 14:56 ET (18:56 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.