U.S. corn dropped near the lowest since mid-April and soybean futures fell sharply on Thursday, pressured by outlooks for rain and cooler temperatures in the Midwest crop belt.
The declines come after agricultural futures hit multiyear highs this year, fueled by demand from China and fears that dry weather could bring supply shortfalls when global stocks are strained, exacerbating concerns of food inflation and global hunger.
The National Weather Service forecast shows above-normal rains and average temperatures across the Midwest in the 8-14 day range. That would help ease dryness ahead of July, a key time for crop development.
Wheat followed the weaker trend, with seasonal pressure noted from the U.S. winter wheat harvest. Chicago Board of Trade July corn settled down its 40-cent daily limit at $6.33 per bushel.
CBOT July soybeans ended down 118-3/4 cents at $13.29-3/4 per bushel while new-crop November soybeans fell 90-1/2 cents to $12.52-3/4, dropping below psychological support at the $13 mark for the first time since April.
Grains followed declines in crude oil and gold as the U.S. dollar rose sharply after the U.S. Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
Commodity funds hold a net long position in CBOT corn, soybean and soy oil futures, leaving the markets prone to bouts of long liquidation.
CBOT soybean, soyoil, soymeal and corn futures will trade with expanded daily limits for Friday’s session, the exchange said.
CBOT July soyoil fell by its expanded 5.5-cent daily limit to 56.57 cents per pound, nearly 9% on the day, as global vegetable oil markets, including Euronext rapeseed and Malaysian palm oil futures, retreated from all-time highs set in recent months.
Soyoil futures have faced pressure following news the U.S. Environmental Protection Agency is considering ways to provide relief to U.S. oil refiners from mandates requiring the blending of biofuels including soy-based biodiesel.