US grain and soybean futures fell on Friday as investor jitters about China's economy continued to cool confidence in commodity markets and early data from a recent industry crop tour showed strong yield potential in the western Corn Belt. Corn was on pace for a modest weekly gain after falling 2 percent last week but soybeans and wheat were poised for a second straight weekly drop.
The CBOE Volatility Index, the market's favored barometer of volatility, highlighted some traders' unease, hitting its highest in more than eight months. "It's all global fears," said Arlan Suderman, analyst with Water Street Solutions. "It's 'dump commodities, dump equities and get to the sidelines'." Corn prices softened after consolidating from a rally this week, with traders awaiting Friday's crop estimates from the Pro Farmer newsletter following this week's Midwestern farmland tour. Many traders expect the results to show yield potential below recent forecasts by the US government.
The Commodity Weather Group raised its yield forecast for the US corn crop to 165.3 bushels per acre from 163.7 but this was still below the US Department of Agriculture's latest figure of 168.8 bu/acre. Scouts on the tour found above-average crops in the western Midwest and well below-average crops in the east due to excessive early-season rains. Wheat prices also eased after US weekly exports spotlighted ample global supplies as big harvests in Europe and the Black Sea region flowed into the market.
"There simply aren't any friends for US wheat right now," said Agrivisor LLC analyst Dale Durchholz. Even the recent pressures on the US dollar, which was down for the third straight day against a basket of currencies , couldn't boost agricultural commodity pricing, Durchholz said. When supplies are tight and prices are high, grain prices tend to become stronger when the value of the dollar is down. "But now, when prices are low and supplies are so high, the currency values can change and not make much difference," he said. "Right now, it's still relatively cheap in what you can buy."
Chicago Board of Trade November soybeans, the most actively traded soybean contract, was down 14-3/4 cents, or 1.6 percent, to $8.92-1/2 a bushel by 10:49 am CDT (1549 GMT), hovering just above a nearly six-year low of $8.88. Worries about Chinese growth intensified after a survey showed the country's factory sector shrank at its fastest rate in almost 6-1/2 years in August, triggering a further slide in equity and commodity markets. The soybean market tends to be sensitive to macroeconomic sentiment about China as it dominates global imports of the oilseed. CBOT December corn was down 5-1/4 cents per bushel, or 1.4 percent, at $3.77-1/4. CBOT September wheat dipped 9-1/2 cents per bushel, or 1.9 percent, at $4.96-3/4.
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