Chicago | Reuters—Chicago Board of Trade grain and soybean futures turned higher on Friday as market participants and fund traders scrambled to cover their hefty short positions on signs of the U.S. economy weakening, market analysts said.
But corn and soybean prices still hovered near four-year lows on large global supplies and as forecasts for cool, rainy weather in the U.S. corn belt improved the crop outlook.
The most-active CBOT soybean contract Sv1 settled up 10-3/4 cents at $10.27-1/4 per bushel, while CBOT corn Cv1 ended up 4-3/4 cents at $4.03-1/4 per bushel. Both ended the week lower.
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CBOT wheat Wv1 settled the day up 7 cents at $5.39 per bushel, and ended the week up 2.96%, as traders weighed the production impact of adverse weather in Europe and China.
The volatile trading began early Friday morning, after the U.S. Labor Department reported the U.S. unemployment rate had jumped to near a three-year high in July amid a significant slowdown in hiring and heightened market fears that the economy was vulnerable to a recession.
That in turn sent investors racing for safe havens, fuelling a sell-off in global equities, a sharp drop in the U.S. dollar USD/ and U.S. Treasury yields fell to multi-month lows. The VIX stock market volatility measure .VIX, dubbed Wall Street’s fear gauge, surged.
The ripple effects also rolled across U.S. agricultural markets, where cattle futures plunged on signs of algorithmic trading and grain and oilseed futures rallied, analysts said.
Speculators anticipating ample grain and soybean supplies have amassed large net short positions in CBOT soybeans, corn and wheat. Funds were net sellers of corn and soybeans and net buyers of wheat on Thursday, traders said.
“None of the fundamentals in grains or livestock have changed,” said Don Roose, president of US Commodities. “But the market is saying that the world is on fire, so there’s going to be flight to take cover.”
Additional reporting for Reuters by Nigel Hunt in London and Peter Hobson in Canberra
