The drop in key food prices offers some relief from inflation

Soft commodities fell, providing some respite for rampant food inflation as traders weigh inbound data on harvests and looming recessions in some major economies.

Warm harvests begin in the northern hemisphere, with analysts continuing to raise production estimates for some key growers like Russia following favorable weather conditions.

According to analyst Agritel, the prospect of recessions is also weighing on commodity prices.

A subdued economy can mean reduced fuel consumption or encourage shoppers to cut back on higher-priced groceries like meat.

Chicago soybean oil is heading for its longest pullback since 2019, Paris canola has erased its annual gain and Malaysian palm oil recently entered a bear market as rival producer Indonesia ramped up exports.

The declines could offer some relief to global consumers facing rapidly rising living costs and growing food insecurity.

The United Nations food price index has slipped from a record high in March after the Russian invasion choked off exports from Ukraine, a leading shipper of grain and vegetable oil.

“There are signs that the global food crisis is nearing its peak,” said Chua Hak Bin, an economist at Maybank Investment Banking Group.

He added that the slump in palm oil will ease the pressure on cooking oil prices.

Corn, wheat and soybean futures fell in Chicago as trading resumed after a US bank holiday weekend.

Corn fell as much as 4.2 percent to $7.005 a bushel, its lowest intraday price in two weeks.

Soybeans fell to their lowest level since February.

Nonetheless, weather concerns remain for several major producers and Ukrainian exports continue to be constrained by the Russian invasion. These could support prices later.

“Market watchers will be excited to see if last week’s heat wave will affect weekly US corn health assessments,” Farm Futures analyst Jacqueline Holland said in a note.

A European Union agency lowered its outlook for the bloc’s soft wheat yields to below average levels in a report Monday, after spring heat and drought.

Drought in most of the US corn and soybean belt will continue to be a concern through early July, forecaster Maxar said.