CHICAGO, June 24 (Reuters) – U.S. corn, soybean and wheat futures continued to fall on Friday, caught up in a broad commodity sell-off as investors shed risky assets following Britain’s vote to leave the European Union.
Equities and commodities dropped sharply, while traditional safe-haven investments like gold and the U.S. dollar rallied as investors came to terms with the outcome of Thursday’s referendum, which confounded market expectations this week that British voters would opt to stay in the EU.
Crop markets are down, but not that hard, having already had a down week as improved North American weather caused investors to wind down risk premiums associated with worries about a hot dry summer in the U.S. Midwest.
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At 10 a.m. CST November canola was down $4.60 per tonne at $480.60, down about one percent.
“The upset of sorts … has the global marketplace in turmoil, with the U.S. dollar spiking and commodities getting killed,” Matt Zeller, director of market information at INTL FCStone said in a note to clients.
Reaction to the British vote added pressure on grains that have been weakened this week by rain relief for corn and soybean crops in the U.S. Midwest and an advancing U.S. wheat harvest.
The front-month K.C. hard red winter wheat contract sank to a fresh 10-year low on Friday while the more active Chicago Board of Trade soft red winter wheat hit its lowest since April 13.
Corn extended its losing streak to five days, hitting its lowest since May 10.
“The agricultural markets have been caught in the storm on Brexit,” said Luke Mathews, senior risk management consultant at FCStone Australia.
“The macro-economic environment is going to be the key driver for all markets including agriculture for a while.”
At 10 a.m. CST new crop corn and soybeans were down about 1.5 percent.
For the week, corn was down roughly 12.6 percent, soybeans were down 5.8 percent and wheat was down 4.3 percent. The improving crop weather across the U.S. Midwest triggered liquidation by investment funds.
The U.S. dollar climbed more than two percent against a basket of currencies, propelled by a plunge in the British pound and a sharp drop in the euro, putting pressure on U.S. dollar-denominated commodities.
In contrast, spot milling wheat in Paris edged up 0.6 percent to 160.00 euros a tonne while benchmark feed wheat in London added 4.3 percent to 119.50 pounds a tonne, helping by the weakness in the pound and the euro.
