(Bloomberg) — Agricultural commodities including wheat and cotton slumped Monday as traders gauged recession risks and the threat from Tropical Storm Debby, though the selling wasn’t as severe as in other global financial sectors.
“We have a stress in the financial markets, but not enough for a broader selloff today,” said Victor Martins, a risk manager at brokerage firm Amius Ltd. “Commodities are trading their fundamentals.”
The slump in grains is limited as funds gauge record short positions ahead of an upcoming US Department of Agriculture crop report, Martins said.
Wheat futures fell as much as 3.6% in Chicago before paring much of the losses. Cotton and arabica coffee also dropped in New York, while corn and soybeans traded higher.
It is certainly a macro day, but grain fundamentals look decent, said Ben Buckner, chief grains analyst for AgResource Co. “There’s just value in current prices and how US corn and soy are cheap in the world markets.”
Global financial markets tumbled Monday on fears of an economic slowdown, triggered in part by Friday data that showed rising US unemployment. A recession would depress consumer and industrial demand for commodities.
Traders are also monitoring the path of Tropical Storm Debby, which made landfall in Florida Monday as a hurricane.
The most severe concerns are east of the main corn, cotton and soy growing regions, but southeast Georgia and eastern South Carolina could face flooding losses, said Cade Groman, a forecaster at Commodity Weather Group.
The storm is also too far north to affect Florida’s orange production, but “remnants will move very slowly over the Southeast this week, threatening severe flooding near the coast,” Groman added.
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