U.S. grains: Wheat, soy, corn fall sharply on fund selling

'It is basically risk-off across the board'

CBOT December 2020 wheat with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — Chicago Board of Trade soybean, corn and wheat futures plunged on Monday as concerns about fresh coronavirus-driven lockdowns due to rising global case counts sparked a wave of risk-off trades.

The grains, led by a 3.7 per cent drop in wheat that marked its biggest daily percentage decline since August 2019, were caught up in a global sell-off of commodities as investors sought safe-haven assets such as the U.S. dollar.

“It is basically risk-off across the board,” said Arlan Suderman, chief commodities economist for broker StoneX.

Soybean futures settled down 2.1 per cent, their biggest daily decline since April 1. Traders shrugged off a U.S. Agriculture Department announcement that private exporters reported the sale of 132,000 tonnes of soybeans to China. There also were soybean sales to Pakistan and unknown destinations.

Strong demand from China had pushed soybeans to their highest in more than two years last week, but that rally left the market vulnerable to declines.

“The funds are just long up to their neck in beans,” said Mark Gold, managing partner with Top Third Ag Marketing. “Outside bearishness sparked long liquidation.”

CBOT November soybeans settled down 21 cents at $10.22-1/2 a bushel.

“The soybean rally is perhaps entering its late phase,” said Tobin Gorey of the Commonwealth Bank of Australia. “The investor long is likely to be close to historical highs, suggesting waning buying appetite going forward.”

CBOT December corn was 8.75 cents lower at $3.69-3/4 and CBOT December soft red winter wheat sagged 20-1/4 cents to $5.54-3/4 a bushel.

Wheat was on pace for its biggest drop in percentage terms since July 16.

The surging U.S. dollar dampened export prospects for U.S. commodities, making them relatively more expensive than offerings from other countries. Wheat, which faces competition from suppliers around the world, typically is affected the most by a strong dollar.

— Mark Weinraub is a Reuters commodities correspondent from Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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