CBOT Weekly: Prices tumble, uncertainty ahead

Glacier FarmMedia | MarketsFarm — It was a tough week for grain futures on the Chicago Board of Trade during the week ended June 25.

September corn lost 24 cents per bushel to close June 25 at a contract low of US$4.05, while August soybeans lost 37.25 cents at US$10.295/bu. September Chicago soft wheat shed 46 cents at US$5.465, September Kansas City hard red wheat was down 47.25 cents at US$5.3925/bu. On the Minneapolis market, spring wheat dropped 33.5 cents at US$6.28/bu.

Scott Capinegro, a Chicago-based hedging specialist for AgMarket.net, pointed to recent and upcoming rains in United States growing areas as one of the reasons for their respective downturns.

“We have no threatening weather as of yet. Even though we just came out of this four-day heat, there have been areas getting rain. Some get it; some don’t. That’s just typical summer weather,” Capinegro said.

The U.S. Department of Agriculture reported crop conditions for corn, soybeans and wheat last week were steady to slightly lower. Despite this, grain futures continued to fall.

“The market action has just been terrible,” he added.

The USDA will release its acreage and stocks reports on June 30. Capinegro said AgMarket.net is projecting 95.8 million seeded acres of corn this year. The trade’s average estimate is 95.35 million acres.

“Between 95 million to 96 million, I don’t think it’ll be a big surprise,” he said.

What is surprising is the latest projections out of Brazil forecasting a record safrinha corn crop, which is providing additional pressure on prices. Capinegro anticipates a bottom price for nearby corn of approximately US$3.95/bu. coming up in the next week or so, while also commenting that if it weren’t for front-loaded buying of U.S. corn from Mexico due to tariff fears earlier this year, corn could be down to US$3.50/bu. right now.

As well as the USDA’s acreage and stocks reports, he said the trade will try to determine how the markets will fare after U.S. Independence Day. On July 9, the tariff pauses implemented by U.S. President Donald Trump on other countries may expire and two days later, the USDA will release its monthly supply/demand estimates.

Capinegro said all of these could create more grain price movement, but there is also frustration regarding the U.S. Federal Reserve’s decision on June 18 to hold interest rates due to the possible resumption of worldwide tariffs.

“I know brokers are depressed (and) farmers are depressed. Trump wants inflation down (and) he’s getting it,” he said. “Our interest rates should be coming down … If interest rates did come down, the dollar would be weaker and it could help the U.S. farmer. But it is what it is.

“We’re fighting Mother Nature. We’re fighting (politics). It’s a tough time for the market.”