Grains Fall to Nine-Year Low on Global Supply Glut, Equity Rout

  • `Culmination of everything' bashes gauge for corn, wheat, soy
  • Brazil weather, Argentine exports drive bearish outlook

A measure of wheat, corn and soybean prices fell to a nine-year low as beneficial weather in Latin America boosted concerns that global supply gluts will expand, while a slump in equities dragged commodities lower.

The Bloomberg Grains Subindex fell as much as 2.1 percent to 38.77, the lowest since Sept. 15, 2006. Beneficial rain boosted prospects for crops in Brazil, and Argentina exporters are increasing shipments, partly after the government relaxed tariffs. World equities headed for the biggest drop to start to a year in at least three decades, led by a rout in China.

“It’s just a culmination of everything,” Don Roose, president of U.S. Commodities in West Des Moines, Iowa, said in a telephone interview.

Rain in the next two weeks will recharge soil moisture in Brazil and boost yield prospects after dry conditions in December threatened corn and soybean crops, Joel Widenor, the director of agriculture services at Bethesda, Maryland-based Commodity Weather Group LLC, said in a telephone interview. Drier weather in southern Brazil, Paraguay and northern Argentina in the next week will aid soaked plants reaching a reproduction phase, Widenor says.

In the U.S., less than 2 percent of soft red winter wheat acreage was lost to flooding in the southern Midwest in the past week, and more-favorable conditions this week will help rivers crest and ease the deluge from Illinois to Louisiana, Widenor said.

Argentina Surge

Shipments of grain and oilseeds from Argentina were $752 million in the last three days of 2015, almost double the amount in the entire month of November, according to exporter group Ciara-Cec.

On the Chicago Board of Trade, wheat futures for March delivery dropped 2.5 percent to close at $4.5825 a bushel. Earlier, the price touched $4.56 , the lowest for a most-active contract since June 29, 2010.

Corn futures for March delivery slumped 2 percent to $3.515 a bushel. The price touched $3.505, the lowest since June 1.

Soybean futures for March delivery dropped 1 percent to $8.56 a bushel. The oilseed touched $8.5325 the lowest since Nov. 23.

In the past 12 months, wheat tumbled 21 percent, soybeans fell 15 percent and corn declined 11 percent.

The MSCI All-Country World Index of equities slumped as much as 2.8 percent. Trading of equities in China, the world’s largest purchaser of soybeans, was halted after a 7 percent plunge.

The Bloomberg Commodity Index, a measure of returns from 22 raw materials, fell 0.8 percent to 77.91 at 2:50 p.m. New York time. The gauge has dropped 25 percent in the past 12 months.

The U.S. is the world’s top corn exporter, followed by Brazil and Argentina. Brazil is the biggest soybean shipper, followed by the U.S. and Argentina.

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