CBOT soy, grain futures higher on US economy concerns

04 Aug, 2024

CHICAGO: Chicago Board of Trade grain and soybean futures turned higher on Friday as market participants and fund traders scrambled to cover their hefty short positions on signs of the US economy weakening, market analysts said.

But corn and soybean prices still hovered near four-year lows, and headed for weekly losses as forecasts for cool, rainy weather in the US corn belt improved the supply outlook.

The most-active CBOT soybean contract was up 1.28% at $10.29-1/2 a bushel at 1620 GMT, and CBOT corn rose 1.38% to $4.04 a bushel. CBOT wheat was up 0.99% at $5.37-1/4 a bushel, as traders weighed the production impact of adverse weather in Europe and China.

The volatile trading began early Friday morning, after the US Labor Department reported the US unemployment rate had jumped to near a three-year high in July amid a significant slowdown in hiring and heightened market fears that the economy was vulnerable to a recession.

That in turn sent investors racing for safe havens, fuelling a sell-off in global equities, a sharp drop in the US dollar and US Treasury yields fell to multi-month lows. The VIX stock market volatility measure, dubbed Wall Street’s fear gauge, surged. The ripple effects also rolled across US agricultural markets, where cattle futures plunged on signs of algorithmic trading and grain and oilseed futures rallied, analysts said.

Speculators anticipating ample grain and soybean supplies have amassed large net short positions in CBOT soybeans, corn and wheat. Funds were net sellers of corn and soybeans and net buyers of wheat on Thursday, traders said.

“None of the fundamentals in grains or livestock have changed,” said Don Roose, president of US Commodities. “But the market is saying the world being on fire, so there’s going to be this flight to take cover.”

On Thursday, US corn and soybean futures fell to their lowest levels in nearly four years as forecasts for cool, rainy weather in the Corn Belt boosted yield expectations and depressed prices, analysts said. Meanwhile, wheat futures rose on global weather concerns during a choppy trade.

The most-active corn contract on the Chicago Board of Trade was down 1-3/4 cents at $3.98 a bushel by 11:13 a.m.

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