The 'soft' commodities are not protected from the strong stock market correction that will take place on Monday, August 5. The European stock exchanges, but also those in the US and Japan, all saw their prices open considerably lower. The futures market quotes for wheat, corn and soybeans, among others, also turn dark red.
Looking at the market situation for European wheat there is actually no reason for a falling price at all. 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 stock exchange closed up 1% at $5,62 per bushel. The September contract on the Matif ended at €219,75 per tonne. A drop of 50 cents.
Monday afternoon, August 5, is a completely different story. The price in Paris fluctuates around €3 per tonne below Friday's close. Rapeseed and maize also have to lose a few percent.
After-effect from EU
In the US, wheat prices in Chicago fell 2% to $5,27 per bushel. The American financial markets already ended lower on Friday, but the reaction from Europe and Japan is also having an effect here. Positive expectations for the harvest in the country also do not contribute to sentiment.
The shifts in 'soft commodities' are not as shocking as the financial markets show. The AEX index fell 3,3% after opening. In Frankfurt, London and Paris it was 2,5%. The Japanese Nikkei even closed 12% lower. That is the biggest drop since the stock market crash of 1987.
Falling dollar
Chicago corn prices fell 1,2% to $3,98 a bushel. This puts it below the important $4 level. Soybeans showed the smallest decline, down 0,5% to $10,21 per bushel. More pressure on the dollar exchange rate is favorable for the export of grains and oilseeds, which American exporters will need this year with full silos and a large harvest on the way.
A possible recession in the US could push prices down further and stock market traders are trying to take as few risks as possible.