The “meltdown” affecting world financial markets has done a number on the corn and soybean markets as well. That is good news for livestock producers, but bad news for corn and soybean growers.
“As long as these credit and financial markets are under pressure, the commodity markets will remain under pressure,” says Marty Foreman, senior economist with Doane Advisory Services in St. Louis. Perhaps if the crop-production estimates from USDA come out a little short this Friday, it might help stabilize corn and soybean prices. But until the financial markets stabilize, “I don’t have a high degree of confidence that we will go up very much,” Foreman adds.
Corn for December delivery settled at $4.17 on the Chicago Board of Trade Tuesday. That is $3.70 off the contract high of $7.87 set on June 27.
Soybeans for November delivery settled at $9.26 Tuesday, which was $7.1075 off the contract high set on July 3.
“The market has been in decline since the first of July — once we got past the flooding issues (in the Midwest) and the acreage reports for corn, which were higher than expected,” Foreman says. And, the weather since that time has generally been favorable for crop production.
“The liquidation really accelerated once we got into the financial meltdown, especially the last two weeks,” he adds. “Corn prices are down roughly $1.50 a bushel in the last two weeks.”
“The whole thing that has affected the equity market has bled over to commodities,” Foreman says. Money has been moved out of riskier investments like commodities and into safer investments like T-bills or cash. And, there are concerns as well that the financial crisis will affect export markets, since the crisis is global in scope.