Corn and soybean prices tumbled on Friday as the best week of harvest so far this fall weighed on the market, oil prices fell 3 percent and the US unemployment rate spiked to its highest level in 26-1/2 years. The harvest of the world's largest corn and soybean crops - the slowest in 24 years amid incessant rains - finally hit full steam amid clear skies across the Midwest grain belt.
"We are seeing first true harvest pressure," said analyst Dax Wedemeyer of US Commodities in West Des Moines, Iowa. "There is also some outside pressure, from crude oil." Wedemeyer said corn and soybean futures had already set their peaks for this year, adding that unemployment rising to 10.2 percent in October would be an added weight for prices. CBOT December corn settled 7-1/2 cents, or 2.5 percent, lower to $3.67 per bushel. For the week, corn is virtually unchanged. Corn got a huge boost from the inflow of investment funds early this week, rising 6.43 percent on Monday and Tuesday.
But that was followed by third straight days of declines. CBOT November soybeans fell 19 cents, or 2 percent, to $9.48 per bushel. For the week, soybeans are down 3 percent. Fund buying lifted soybeans 3 percent on Monday and Tuesday, but futures posted losses the following three days. CBOT December wheat fell 15 cents, or 3 percent, to $4.97-1/4 a bushel. For the week, it was up 0.5 percent.
Traders said there was a noticeable absence of active buying by investment-speculative funds, leaving the market to trade to a large extent on fundamentals like the advancing harvest boosting supplies in physical markets. "We are seeing harvest pressure Nebraska through Ohio," said analyst Joe Victor of Allendale Inc in McHenry County, Illinois, referring to a wide swath of the Midwest grain belt.
He said there was also pressure from external factors like the unemployment rate announced by the Labour Department as feed demand might be affected as fewer people eat beef. Live cattle futures at the Chicago Mercantile Exchange fell 1.5 percent amid fears that consumers would turn away from beef for lower-priced pork and poultry meats.
"People will not be eating the high cuts of beef," Victor said, referring to the high unemployment rate. Traders and analysts were also looking ahead to next Tuesday's update of the government's forecasts for corn and soybean production in the United States this year.
Last month, the US Agriculture Department forecast an all-time high US soybean crop of 3.250 billion bushels, and corn production at 13.018 billion bushels - the second largest ever, trailing only the 2007 harvest of 13.038 billion. Traders and analysts polled by Reuters were expected the USDA to estimate corn production at 12.940 billion bushels, and soybeans at 3.262 billion bushels.