Crop Futures Tumble `Back to Reality' After Bull-Market Run

  • Wheat plunges most in three years; soybeans, corn tumble
  • Global supplies ample in spite of South American weather woes

Grain and soybean prices tumbled amid speculation that ample global supplies will be enough to make up for losses in South America, where farmers are contending with dual threats of flooding and dry weather.

Wheat futures plunged the most in three years as winter-crop concerns eased in the U.S., one of the top exporters. Soybeans posted the biggest drop since August, a day after entering a bull market on estimates that floods will reduce output in Argentina, the world’s third-biggest grower. Corn dropped after rallying in recent weeks as dry conditions threatened crops in Brazil.

The recent rally marked a reversal for agriculture markets that have slumped for much of the past three years amid consecutive bumper harvests worldwide. Gains may have been exaggerated with grain stockpiles at the highest in three decades, while weather conditions improved in the U.S. and Russia.

“We are going to see some reductions in South America for soybeans, but we still have ample stocks,” said Benjamin Bodart, a director at CRM Agri-Commodities, a farm adviser in Newmarket, England. “It’s back to reality now. Back to the fundamentals. The market’s just got crazy, and it has probably been slightly overdone.”

Goldman Sachs Group Inc. cut it price forecast for wheat amid ample global supplies and said in a report that the outlook was bearish for corn and soybeans.

Wheat futures for July delivery tumbled 5.9 percent to close at $4.74 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since March 28, 2013.

Soybeans Tumble

Soybean futures for July delivery slumped 3 percent to $9.9625 a bushel. On Thursday, the price reached touched $10.4375, the highest since July, and closed up 20 percent from a low in November, meeting the common definition of a bull market.

Weather concerns probably encouraged speculators to enter the market, accelerating the price increase, Stefan Vogel, the head of agricultural commodities research at Rabobank International in London, said in a telephone interview. Money managers were net-long more than 100,000 soybean contracts as of April 12, the biggest bullish wager since June 2014, according to the latest data from the Commodity Futures Trading Commission.

“As soon as we jumped well above $10 in soybeans and hit close to $4 on corn, the air was getting thinner up there,” Vogel said. “It’s really time for a break and some profit taking.”

Corn futures for July delivery fell 3.7 percent to $3.755 a bushel. On Thursday, the price dropped 2.5 percent after touching a nine-month high at $4.0725.

Soybean-meal futures for July delivery declined 4.1 percent to $314.60 for 2,000 pounds, the biggest decline since Aug. 12.

Aggregate trading in grains, soybeans and the related oilseed contracts more than doubled compared with the 100-day average, according to data compiled by Bloomberg.

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