Prices for U.S. grains are locked in a volatile pattern as growing areas of the country wait for rain.
Following the long holiday weekend, grain futures trading on the Chicago Board of Trade have plummeted to start the week. Most-active corn futures closed Monday down by their limit of 40 cents a bushel, falling 6.9% to $5.40 a bushel. Soybean futures fell 6.7% to $13.05 a bushel, and wheat dropped 4.1% to $6.26 a bushel.
Today’s move lower essentially erases upticks seen last week, when futures soared after the U.S. Department of Agriculture released two key reports detailing the outlook for grains supplies and demand. Last Wednesday, the most-active corn contract on the Chicago Board of Trade soared 7% to $5.88 per bushel, while soybeans climbed more than 6% to nearly $14 per bushel. Wheat rose more than 5% following the report’s release.
Heading into the hottest days of the summer, above-average temperatures and dry conditions in the forecast may roil crop production in areas already in the grips of a drought. The volatility in agricultural futures is linked to the uncertainty that growing regions will get the rain they need.
“Now is when rains will become more critical though as developing crops require more moisture as they progress,” said Karl Setzer, a commodity risk adviser with AgriVisor, in a note Friday.