Corn and soybean prices drop to multi-month lows on big harvests

Chicago corn futures dropped to a four-month low on Tuesday, while soybean prices hit a two-and-a-half-month low.

Market Drops

Traders pointed to expectations for huge domestic harvests and worries about export demand. Corn fell 6 cents to $4.42-1/4 a bushel, marking its lowest price since July 2. Soybeans slid 4 cents to $12.12-3/4 a bushel to touch their weakest level since August 17. Wheat prices also declined, falling 7-1/2 cents to $5.99 a bushel.

Export Pressures

Weak demand for exports weighed on the market. Rich Nelson, chief strategist at Allendale, said export sales are lagging behind last year's pace. At the same time, the US Department of Agriculture estimates that farmers grew the second-largest corn crop on record and the biggest soybean crop ever. Soybean harvesting reached 88 percent complete by Sunday. Traders also worried about selling US soybeans to countries other than China because of competition from Brazil, which is the world's top supplier.

Peace Talks

Wheat futures fell as traders focused on upcoming peace talks. The Kremlin confirmed that Russia will join three-way talks with Ukraine and the US in Abu Dhabi on November 10-11. Past fighting has hurt grain exports from the Black Sea region. Andrew Whitelaw of Episode 3 noted that a stop to fighting could release pent-up grain supplies from Russia and Ukraine, placing more pressure on an already weak market.

Context

Agricultural commodity prices often drop when farmers produce record-large crops because supply outpaces current demand. Global trade patterns also shift quickly based on international competition and political events like peace talks in major shipping regions.