Hard agricultural commodities cratered to finish the trading week. The gains have been trending downward, fueled by concerns surrounding China’s economy. With Beijing being one of the top commodities importers in the world, traders have turned bearish that Chinese demand will not be strong. The good news is that the softer commodities are still holding strong.
September corn futures fell $0.1075, or 2.55%, to $4.10 per bushel at 18:52 GMT on Friday on the US ICE Futures exchange. Corn recorded a weekly gain of 1.11%, but it is down 12.9% year-to-date.
September wheat futures tumbled $0.15, or 2.79%, to $5.2275 per bushel. Wheat prices posted a weekly drop of 4%, adding to their year-to-date decrease of nearly 17%.
September soybean futures plunged $0.33, or 3.06%, to $10.465 a bushel. Soybean prices enjoyed a weekly boost of 1%, but they have crashed 20% so far this year.
Various agricultural commodity indexes have weakened in recent months, coinciding with the poor performance coming out of the world’s second-largest economy.
Indeed, the Chinese economy has weakened this year. The second-quarter GDP growth rate was 4.7%, falling short of the consensus estimate of 5.1%. Retail sales eased in June, industrial output eased in June, and the unemployment rate was unchanged at 5%. Consumer inflation and producer prices suggested the nation was stuck in a period of deflation.
Global financial markets have been disappointed by the lack of substantial fiscal and monetary stimulus efforts. Earlier this week, the People’s Bank of China (PBoC) trimmed its seven-day reverse repo rate from 1.8% to 1.7% and cut its medium-term lending facility from 2.5% to 2.3%.
MarketWatch likened the current situation to 2015, when China’s economic situation started sputtering, leading to a global slump in worldwide commodity prices. Metal commodities have done well this year, but the hard agricultural commodities have weakened in recent months.
Gold is up 15% year-to-date and silver prices have advanced around 19% so far this year.
In other agricultural commodities, September coffee futures ended the Friday session up 0.15% to 2.306 per pound, lifting their year-to-date gain to close to 23%. September cocoa futures rose $14.00, or 0.17%, to $8,052.00 per metric ton, adding to their year-to-date gain of nearly 92%. October live cattle futures shed $0.01, or 0.05%, to $1.885 per pound, but they are up 12% on the year.