Major setbacks in corn and wheat helped drive the grains sector sharply lower just one week after weaker-than-expected U.S. acreage and stock reports helped drive the sector higher. Overall, the year-long surge in global food prices paused in June after the UN FAO reported the first drop in 13 months in its Global Food Price Index. It dropped by 2.5% in June with the year-on-year surge easing to a still elevated 34% from 40% in May. The decline was driven by a near 10% slump in edible oils, such as palm, soy and sunflower oils, while the mentioned fall in corn and maize also supported the decline.

Corn was the biggest loser this past week in response to improved weather conditions across the U.S. Midwest and equally important on speculation that China’s import demand has peaked with local corn futures trading near the lowest levels this year. This is in response to rising Chinese production and expectations that demand for the grain towards animal feed will decline as loss-making hog farmers have stopped expanding herds. A recent USDA briefing from Beijing estimated the country’s imports in 2021-22 will reach 20 million tons, well below the department’s official 26-million-ton forecast.