Corn futures hit multi-month lows as US harvest advances

what happened

Corn futures on the Chicago Board of Trade slid to multi-month lows on Monday. Traders pointed to the US harvest, which is moving ahead and may swell already large inventories and expand global export supplies, along with softer crude prices. According to Reuters, the December contract settled one cent lower at $4.55 a bushel after dipping to $4.50 1/4 earlier, the weakest level since July 10.

Weakness in soybeans spilled over into grains. In Brazil, the real lost roughly 12% against the dollar in spot trading as the market opened, and the stock exchange triggered a circuit breaker and halted trading. The reaction followed the re-election of President Luiz Inacio Lula da Silva, which erased investor optimism that had been built on his right-wing rival leading the first round earlier in the month.

Oil recovered after an early drop of more than $2 a barrel. Continued attacks targeting Saudi Arabia, a key producer, have kept market participants on edge, leaving prices close to six-month peaks. Diplomatic efforts to settle the situation were also under way.

why it matters

For macro investors, the mix of seasonal grain pressure, a sharp sell-off in the Brazilian real and crude oil near six-month highs signals risk for commodity-linked currencies and farm margins. The trading halt in Brazil shows how a political outcome can quickly reprice local assets.

market impact

Corn and soybeans: harvest supply weighs on futures; BRL: political shock pressures Brazil's currency

tags

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