The 'soft' commodities are not immune to the strong stock market correction that took place on Monday, August 5. The European stock markets, as well as those in the US and Japan, all saw their prices open significantly lower. The futures market prices for wheat, corn, and soybeans are also deep red.
Looking at the market situation for European wheat, there is actually no reason for a price decline. A weaker dollar supports exports in the US, and the country expects more wheat exports due to a smaller harvest in the EU. On Friday, the Chicago market closed 1% higher at $5.62 per bushel. The September contract on the Matif ended at €219.75 per ton, a decrease of 50 cents.
Monday afternoon, August 5, tells a different story. The price in Paris fluctuates about €3 per ton below Friday's closing. Rapeseed and corn also have to give up a few percentage points.
EU Aftermath
In the US, the wheat price in Chicago dropped by 2% to $5.27 per bushel. On Friday, the American financial markets already closed lower, but the reaction from Europe and Japan also has an impact here. Positive expectations for the country's harvest do not contribute to the sentiment.
The shifts in 'soft commodities' are not as dramatic as the financial markets suggest. The AEX index dropped by 3.3% after opening. In Frankfurt, London, and Paris, it was 2.5%. The Japanese Nikkei even closed 12% lower, marking the largest decline since the 1987 stock market crash.
Declining Dollar
The corn price in Chicago fell by 1.2% to $3.98 per bushel, dropping below the important $4 level. Soybeans showed the smallest decline, down by 0.5% to $10.21 per bushel. More pressure on the dollar price is beneficial for the export of grains and oilseeds, which American exporters rely on this year with full silos and a large harvest on the way.
A possible recession in the US could push prices further down, and stock traders are trying to take as little risk as possible.
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