U.S. grains down on macroeconomic worries, weather outlooks

U.S. grain prices fell on Thursday amid a broad-based commodity selloff and a firming dollar, a day after the U.S. Federal Reserve signaled it was ready to slow down the pace of bond purchases.

The Fed news sent shock waves across all the financial markets. Wall Street stocks fell more than two per cent, U.S. crude oil fell more than $3 a barrel and gold prices tumbled to their lowest levels in more than 2-1/2 years.

Additional pressure on grains stemmed from economic data from China, the flash HSBC Purchasing Managers’ Index, which hinted at weakening in the world’s second-largest economy.

“The Chinese PMI came in at 48.3 according to HSBC, and that is down almost one point from the month before. It was expected to be down only 0.1 of a point,” Sterling Smith, futures specialist with Citigroup in Chicago, said in a daily note.

China is the world’s biggest buyer of soybeans, making the oilseed market particularly sensitive to news about the country’s economic health.

At the Chicago Board of Trade, July corn ended down nine cents at $6.73-1/4 per bushel, halting a four-day rally (all figures US$). New-crop December corn fell 10 cents at $5.60-1/2.

July soybeans declined 25-1/2 cents to $14.97-1/2 per bushel, settling below $15 for the first time since May 30. New-crop November ended down 25-3/4 cents at $12.85.

July wheat settled down 6-1/2 cents at $7.00-1/2 a bushel.

Weather worries subside

Weather outlooks calmed fears of excessive heat in the U.S. Corn Belt and pressured new-crop corn and soybeans.

“Yesterday some of the forecasters were talking about a high-pressure ridge next week, and they have taken that out of the equation,” said Joe Vaclavik, president of Standard Grain, a Chicago brokerage.

“We needed some warmer temperatures, but if you get one of these extreme high-pressure ridges that can lock in 95 to 100 F temperatures for a week or two, that becomes a big problem. And it looks like we are going to avoid that for the time being,” he said.

Wheat pares losses

Wheat futures fell, but the market drew underlying support from short-covering and some concern about yields as the U.S. harvest of hard red winter (HRW) wheat moves into Kansas, the top-producing state.

“People have come to the conclusion that HRW yields are not as good as they thought,” Roy Huckabay, of Chicago brokerage the Linn Group, said.

Support also stemmed from expectations of strong domestic demand for newly harvested wheat from livestock feeders, given currently high cash prices for feed corn.

Kansas City Board of Trade HRW wheat futures traded higher for part of the session, but the July contract finished down 2-3/4 cents at $7.37 a bushel.

— Julie Ingwersen reports on the CBOT ag markets for Reuters from Chicago.

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