Chicago | Reuters — Chicago Board of Trade corn, wheat and soybean futures fell sharply on Monday as concerns about economic weakness in China and the dollar’s strength raised concerns about global demand for U.S. commodities, traders said.
Corn sank to its lowest level in four months while wheat hit a low not seen since early December.
“2016 is starting off with a thud, mainly due to China,” brokerage INTL FCStone said in a note to clients.
A private survey released on Monday showed China’s factory activity contracted for the 10th straight month in December. The report on the world’s second largest economy triggered a sell-off in stock markets around the globe, with the weakness spilling into commodities markets.
Agricultural futures faced additional pressure from ample global supplies.
CBOT March corn futures settled down 7-1/5 cents at $3.51-1/1 a bushel (all figures US$). Prices hit a contract low of $3.50-1/2 earlier in the session. On a continuous basis, the front-month contract hit its lowest level since Sept. 4.
CBOT March wheat ended down 11-3/4 cents at $4.58-1/4 a bushel after hitting a contract low of $4.56 during the session. The front-month contract hit its lowest level since Dec. 3.
CBOT March soybeans were down 8-1/4 cents at $8.56 a bushel. Soyoil hit its lowest since Dec. 2. Soymeal futures also weakened, hitting contract lows during the session.
Improving weather for developing crops also weighed on the wheat and soy markets.
Temperatures in Russia and Ukraine were expected to climb this week after falling sharply at the end of December. The less severe cold, coupled with the arrival of snowfall, could limit frost damage to wheat crops.
Brazil’s Mato Grosso region received much-needed rains over the past 10 days, relieving a soybean producing area in need of water, and weather forecasts said there would be more rainfall in the week ahead.
The rain could keep Brazil on course for what has been projected to be a bumper harvest, and maintain plentiful global supplies at a time when Argentina’s new government is trying to kickstart exports.
“If we look at the weather in South America, it is a much improved forecast and they had rain in all of the dry areas during the weekend,” said Brian Hoops, president of Midwest Market Solutions, a brokerage and commodity marketing advisory service.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.