Corn and soybean futures started the week off on the wrong foot after weather forecasts improved crop conditions in the Midwest, including cooler temperatures and the possibility for rain later this week, according to Refinitiv’s commodity desk.
On Monday, it was a slaughterhouse for corn and soybean futures, Chicago Board of Trade (CBOT) July corn futures settled down 3.7% at $6.59-1/4 per bushel, and CBOT July soybeans were down 2.4%, at $14.72-1/4 a bushel. By Tuesday morning, corn futures are lower by half a percent, and soybeans are up by half a percent.
“The ags sold off with gusto overnight after weekend weather models flipped cooler and wetter for many key crop production areas of the United States,” Arlan Suderman, StoneX chief commodities economist, wrote in a note.
Cooler weather models signify relief after we showed weather forecasts that suggested dryness and heat across the corn belt. Still, threats of a megadrought linger for the western half of the country as surface soil moisture for early June is the worst in two decades.
Last week, the USDA progress report rated 68% of the corn crops as good to excellent, down four percentage points from the prior week, and 62% of the soy crop was good to excellent, down five percentage points. The downward rating has to do with the dryness of surface soil moisture.
“Early planted crops are starting to show moisture stress,” Iowa Secretary of Agriculture Mike Naig said in a statement. Iowa is the top producing state for corn production and number two in soybeans.
In a completely separate fundamental driver, corn and soybeans prices slumped the last week after the Biden administration may consider scaling down biofuel blending in fossil fuels and provide assistance to oil refiners.
S&P GSCI Agriculture Index is down more than 13% in 23 trading sessions from its all-time-high in early May of $474.