Grain markets collapse today | Tuesday, July 5, 2022

The grain markets collapsed on sharply lower vegetable oil prices and massive fund liquidation in the stock, energy, and grain markets.

July corn closed 18 cents lower at $7.36. December corn closed down 29 cents at $5.78. July soybean futures closed down 51 cents at $15.75, while the November contract closed 79 cents lower. Wheat futures closed 37 to 52 cents lower.

Today's USDA Crop Progress report showed corn conditions had dropped by 3% to 64% good/excellent. Soybean ratings fell by 2% to 63% good/excellent. Spring wheat conditions are at 66% good/excellent up 7% from the previous week. The numbers should be supportive for corn and soybeans but a little negative for wheat prices tomorrow.

• READ MORE: Corn conditions drop 3% in good to excellent rating from previous week, USDA says

In outside markets, the U.S. dollar is trading at the highest level in over 20 years. Crude oil is down $8.70 per barrel, and the stock market has rallied well off of its early day lows and is now down just 167 points.

In livestock markets. August hogs closed up $2.97 at $105.95. August cattle closed down $1.67 at $132.92, and August feeders closed down $1.80 at $172.70.

Fund selling takes grain prices below chart support at midday: 11:35 a.m.

The corn and soybean markets are sharply lower again today with fund selling taking prices below chart support.

At this hour, July corn is down 19 cents. December corn is down 30 cents. July soybean futures are down 37 cents. November soybeans are 73 cents lower. Wheat futures are lower, with CBOT wheat down 34 cents. KC wheat is down 36 cents, and Minneapolis wheat is 35 cents lower.

Three main factors are bombing the corn and soybean markets.

1. There was a sharp drop in palm oil, canola, and soybean oil prices. High vegetable oil prices have finally reduced demand. Now we need to see at what price level demand will start to improve. Soybean oil prices are now down 35% from the highs posted in early May.

2. China cancelled some (five to eight cargoes) expensive old crop soybean shipments.

3. There was a massive fund liquidation as the stock market, crude oil market, and grain markets moved sharply lower in a "risk off day."

In the livestock market, August hogs are up $2.65 at $105.62. August cattle are down $1.00 at $133.60, and August feeders are down 65 cents at $173.85.

In outside markets, crude oil is down $9.20 per barrel. The U.S. stock market is under pressure again with the S&P 500 down 56 points, and the Dow down 560 points.

Grain markets sharply lower after the three-day weekend: 8:45 a.m.

Funds continue to sell and the extended forecasts have turned much wetter for most of the central Corn Belt. On Monday, global grain markets were lower.

July corn is down 19 cents. December corn is down 25 cents. July soybeans are trading 38 cents lower, and November soybeans are down 46 cents. Wheat futures are 3 to 15 cents lower.

The key to watch in the USDA Crop Progress report today will be the crop conditions. I look for both corn and soybean ratings to move 1% to 2% lower.

On the Dalian Commodity Exchange in China, corn and soybean futures are lower. On the Matif exchange in Europe, wheat futures are 18 cents a bushel lower at $11.12.

Livestock futures are higher this morning. August hogs are up 32 cents at $103.30. August cattle are up 7 cents at $134.62, and August feeders are up $1.65 at $176.22.

In early trade, the U.S. stock market is lower with the Dow down 488 points, and the U.S. dollar is higher. Crude oil prices are sharply lower now down over $4 per barrel.

Around the world in the stock market, China is down 0.1%. Japan is up 1.1%. European stocks are down 1.9%.

For a free trial of The Kluis Report including three times a day market updates and the Saturday newsletter, visit kluiscommodities.com, call 888-345-2855, or email info@kluiscommodityadvisors.com.

About the Author: Al Kluis has been a commodity advisor and broker since 1976. Kluis is an introducing broker with Wedbush Futures and writes a column, Your Profit, which appears in every issue of Successful Farming magazine. Kluis has published two books on commodities trading and is commonly quoted in major publications including the Wall Street Journal. He is also a featured speaker at commodity conferences nationwide. Kluis is a frequent market analyst for the Linder Farm Radio News Network. A Minnesota farm boy, Kluis was awarded his degree in ag economics from the University of Minnesota in 1974, after which he was executive director of the Minnesota Soybean Association before entering the markets full-time. His family still farms in southwest Minnesota, and Kluis enjoys helping with fieldwork when the markets allow.

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