【Fujitomi】Chicago grains plunge as weather improvement disappoints investors

（NY Precious Metals）
Gold for the near-month in New York August contract fell by 2.5 dollars from the previous week’s close to 1,268.9 dollars, while New York near-month platinum for July rose by 4.2 dollars to 944.5 dollars.
With a 0.25% rate hike from the U.S. Federal Open Market Committee considered certain, gold, which yields no interest, showed lackluster movement. As the outlook for the U.S. stock market becomes more uncertain, safe-haven buying was watched, but the upside was capped by expectations of higher U.S. rates, and hedge buying was very limited. A sharp drop in New York silver also weighed on sentiment. Palladium continued to rise, providing psychological support for platinum. However, concerns about a further decline in the U.S. stock market have begun, and the mood is deteriorating, with 900 dollars seen as a major resistance level for the time being.

（WTI Crude Oil, NY petroleum products, North Sea Brent）
On the 12th, WTI crude rose slightly. WTI near-month July contract rose 0.25 dollars from the previous week to 46.08 dollars, and North Sea Brent near-month August contract rose 0.19 dollars to 48.34 dollars. RBOB gasoline July contract fell by 1.37 cents to 148.80 cents, and NY heating oil near-month July contract fell by 0.58 cents to 142.54 cents.
There were moments of sharp gains during European trading hours, but news spread that an oil leak from Nigeria’s pipeline triggered a force majeure, pushing prices up. Since Nigeria’s increased crude production contributes to global oversupply, the market reacted sensitively. However, with the U.S. trend toward higher crude production and a price decline in equities implying uncertain demand outlook for oil, WTI peaked at 46.71 dollars and then faded. The 46-dollar level remained, but upside pressure was evident. In particular, the poor performance of oil products weighed on sentiment. A Reuters-supplied inventory forecast ahead of the official data indicated crude stocks down 3.0 million barrels and gasoline stocks down 8.0 million barrels, yet market reaction was tepid, likely because prices had already surged in European trading hours.

（CBOT Soybeans）
On the 12th, CBOT soybeans fell sharply along with wheat and corn. The near-month July contract fell 9.50 cents to 932.00 cents, and the new-crop November contract fell 9.50 cents to 938.75 cents.
For the soybean market, improved weather in the U.S. corn belt is bearish. Concerns about a shift to soybean planting persist, and the weekly supply-demand report released over the weekend was quite weak, leading to a constellation of weak fundamentals and a decline. Looking at the crop condition report to be released after the Chicago close, the expected average of the percentage of good-to-excellent crops across the U.S. is 69% (vs. last week’s 68%). While some minor crop deterioration is anticipated, markets seem to expect improvement from upcoming weather, so further declines are unlikely, and selling pressure increased toward the close. The weather market is in full swing, and prices are being swung by forecasts.

（CBOT Corn）
On the 12th, CBOT corn fell sharply on worries about improving weather. Near-month July contract fell 11.00 cents to 376.75 cents, and new-crop December contract fell 10.75 cents to 395.25 cents.
Weekend weather in the U.S. Corn Belt and Plains was hot and dry, but temperatures did not rise as much as expected. The coming week is expected to be hot and dry again, with chances of rain from Wednesday to the weekend, shifting to a hot and wet forecast. With favorable growing conditions, selling started early in the week. Additionally, the weak production forecast for wheat released previously also weighed on prices, contributing to a drop in wheat at the start of the week and adding selling pressure. Looking at crop conditions to be released after the Chicago close, the nationwide good-to-excellent percentage is expected to be 67% (vs. last week’s 68%). Some minor crop downgrades are anticipated, but the market believes improvement will come with future weather, so the drop is not expected to reverse significantly, and selling continued toward the close. It is a true weather-market move, being driven by weather forecasts.
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