CHICAGO — U.S. wheat futures fell about 3% on Friday, joining a broad sell-off in commodity and equity markets tied to fears of an economic downturn that would dent demand, analysts said.
Corn and soybean futures joined the weaker trend, pressured by recession fears and favorable weather for the expanding U.S. harvest.
Chicago Board of Trade December wheat settled down 30-1/4 cents at $8.80-1/2 per bushel, retreating from a two-month high set a day earlier.
CBOT December corn ended down 11-1/2 cents at $6.76-3/4 a bushel and November soybeans fell 31-1/4 cents to finish at $14.25-3/4 a bushel.
Wall Street equity markets plunged, U.S. crude oil futures dropped nearly 6% and the dollar touched a two-decade high, making U.S. grains less competitive globally, as worries mounted about the health of the world economy.
“Everything is interpreted through the lens of global recession that negatively impacts demand for commodities, leading to the selling as we head into the weekend,” StoneX chief commodities economist Arlan Suderman wrote in a client note.
Outlooks for clear Midwest weather added to bearish sentiment, even though the U.S. Department of Agriculture has projected smaller U.S. corn and soy crops compared to a year ago. The harvest is just beginning in the heart of the Corn Belt, with 7% of the U.S. corn crop and 3% of the U.S. soybean crop cut as of Sept. 18.
“Below-normal rainfall is expected across the central U.S. over the next 15 days, which will favor dry-down and early harvesting of corn and soybeans,” space technology company Maxar said in a daily weather note.
Traders continue to monitor the conflict in Ukraine. U.S. and European wheat futures markets on Thursday reached their highest levels since July 11, after Moscow’s moves to mobilize more troops and back referendums on joining Russia in occupied regions of Ukraine fueled concern about further disruption to vital Black Sea grain trade.
However, rising estimates of what is expected to be a record Russian wheat harvest and ongoing grain shipments from Ukraine through a Black Sea corridor were tempering supply worries.
“Trade flows are not without disruption risk, but so long as ports and transit lanes are open for grains, then prices should generally stay contained,” Citi analysts said in a note. (Additional reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila Editing by Kirsten Donovan, Mark Potter and David Gregorio)