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U.S. corn futures slid to their lowest in more than three years on Monday and soybeans slumped a two-year low, as sharp drops in crude oil prices spilled over into agricultural markets; energy markets can affect grain futures because corn is used to make ethanol and soybean oil is used to make biofuels.
Analysts said technical selling and favorable rains in crop-growing areas of Brazil also helped pressure grain prices.
Most-active corn prices (C_1:COM) on the Chicago Board of Trade closed -1.4% to $4.55/bu and reached the lowest price since December 2020, while soybean futures (S_1:COM) settled -0.8% to $12.45 1/2/bu and hit the lowest price since December 2021.
CBOT wheat (W_1:COM) scored the day’s biggest loss, with the front-month March contract ending -3.2% to $5.96 1/2/bu, after the U.S. Department of Agriculture did not confirm any new export sales to China, failing to follow up at least so far on active buying of large volumes in recent weeks.
ETFs: (NYSEARCA:CORN), (NYSEARCA:SOYB), (NYSEARCA:WEAT), (DBA), (MOO)
With ample rainfall arriving to Brazilian growing areas, fund traders are seen as adding short positions, according to the latest CFTC Commitment of Traders report issued on Friday.
The El Niño climate system is expected to fade as the winter progresses, potentially signaling an ideal planting season in the U.S. in April, with “the expectation is that it has peaked and that it will decline into the spring,” StoneX’s Arlan Suderman said.
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