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Grain Prices Tumble to Start New Week / Corn Limit Down / Lumber off 40% in June

edited July 7 in Other Investing
Thought the folks buying into commodities recently might find this article worthwhile. Most commodities have fallen over the past 4-6 weeks. Oil is a rare exception, although seems to be weakening as of late. Certainly appears to be a disconnect between the rally in the 10-year bond (near 1.3% now) on one hand and higher inflation expectations on the other.

Excerpt :

“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 Tuesday 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


WSJ July 7, 2021


Related - Lumber Prices Dive More Than 40% in June

CNBC


Added note : Oil continues to benefit the funds that have large concentrations in energy. In addition, both real estate and utilities have benefitted recently from falling rates; so to the extent a commodities / NR fund holds those, it has held up better.

Comments

  • Thanks @hank. I see the current dip reflected in my broader-base commodity ETF, DBC. Agriculture is a smaller part of that basket. The longer term trend still looks pretty good though. I still see inflation being a longer term trend (no matter the pace), so for me DBC is a longer term investment, at least through this year and likely next.
  • @MikeM -

    I’m beginning to get your “deer in the headlights” feeling.

    But with a locomotive thrown in.

    image
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