Grain and soybean futures fell sharply Thursday as traders raced out of bets that weather troubles would affect this year's harvest.
Most actively traded contracts for major crops fell over 4%, erasing much of a recent weather-related rally. A benevolent turn in forecasts overnight on Thursday, with longer-term models showing more rain and cooler temperatures, intensified the selling that began after the U.S. Department of Agriculture released what was widely perceived as a negative report for prices on Wednesday.
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Hedge funds and other money managers helped spur the selling, said Charlie Sernatinger, head of grain trading at ED&F Man Capital. Corn futures in particular were "crashing and burning all session long," he said.
The USDA forecast a day earlier above-expectation domestic stockpiles of grain, along with mostly larger global supplies. The agency also didn't change its corn and soybean yield estimates, despite some of the most difficult growing conditions in years. It also forecast higher-than-expected wheat production.
All that had traders backtracking on recent bets that dry and hot weather in some parts of the Plains and Midwest would cause significant problems for this year's harvest. But some analysts said it was too early to swallow the USDA's numbers whole.
The report "does not necessarily reflect what is actually happening out in fields, either good or bad," said Dan Hueber, general manager of advisory firm the Hueber Report. "The market has reacted as if this were the final word on what will be ultimately be harvested this year."
Corn futures for September delivery at the Chicago Board of Trade fell 4.1% to $3.69 3/4 a bushel, all but wiping out a recent rally.
CBOT August soybeans fell 4.4% to $9.75 1/2 a bushel, while September wheat dropped 4.7% to $5.11 3/4 a bushel.
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(END) Dow Jones Newswires
July 13, 2017 15:54 ET (19:54 GMT)