Corn Is Back In a Bear Market as U.S. Rains Spark Reversal

  • November soybeans post biggest-ever drop for contract
  • Rains across Midwest seen maintaining adequate soil moisture

Corn futures are back in a bear market less than a month after entering bull territory as U.S. rains ease crop concerns and boost yield potential. November soybeans had the biggest-ever drop for the contract.

The southern third of the Midwest received extensive rains in the past four days, and northern areas are expected to get precipitation before the weekend, maintaining adequate soil moisture for crops, according to Joel Widenor, vice president at Commodity Weather Group LLC. In June, concerns over dry, hot weather had pushed soybeans to a fourth straight monthly gain and corn into a bull market.

“Rain this weekend provided timely relief,” Joe Camp, a risk management specialist at Bloomington, Illinois-based AgriVisor LLC, said in a telephone interview. “It is increasingly likely we will produce good crops. Demand will need to improve on this break to stabilize prices.”

Prices Tumble

Corn futures for September delivery dropped 2.6 percent to close at $3.5075 a bushel on the Chicago Board of Trade. The contract is down 21 percent from its recent closing high on June 17, meeting the common definition of a bear market. Rolling most-active futures also crossed that threshold.

November soybean futures fell 5.3 percent to close at $10.7725 a bushel on the CBOT. Prices dropped as much as 5.6 percent, a record intraday decline for the contract, which started trading in November 2012. The commodity fell as much as 64 cents, nearing the exchange limit of 65 cents.

In June, hedge funds and other money managers had loaded up on wagers for a corn rally. Some investors had speculated that U.S. farmers would choose to plant more soybeans instead of the grain after a rally for the oilseed. Instead, U.S. government data showed that growers sowed the third-biggest corn crop since World War II. The improving weather is also boosting the outlook for production as plants enter the pollination period.

Speculators are now backing away from their wagers on price gains. In the week ended June 28, a measure of combined holdings across corn, soybeans and wheat fell by 21 percent. The U.S. Department of Agriculture last week boosted its outlook for acreage of all three crops.

“We’re going into pollination for corn without a lot of stress,” Bill Gentry, a marketing consultant at Risk Management Commodities in Lafayette, Indiana, said in a telephone interview. “The funds kind of came into the market hoping for a real weather spook, and it’s dissipated.”

In other markets:

  • Soybean-meal futures for December delivery fell by the $20 exchange limit to $378 per 2,000 pounds on the CBOT.
  • Soft red winter wheat futures for September delivery gained 0.8 percent to $4.335 a bushel. The price earlier touched $4.1575, the lowest for rolling most-active futures since April 2007.
  • Hard red winter wheat futures for September delivery rose 1.2 percent to $4.165 a bushel. Prices earlier dipped below $4 for the first time for most-active futures in a decade.
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