Some of the concerns were logistical due to damage to Japan’s ports from the earthquake itself or tsunamis and aftershocks that followed. The full extent of the damage was unknown, as was the loss of life caused by the event.
But much of the pressure on prices also was psychological as traders sold futures to reduce their risk exposure on ideas the quake may stall economic recovery in Japan and reduce demand for commodities. Japan is the largest buyer of US corn as well as a major wheat and soy complex buyer. Japan is the world’s third largest crude oil consumer.
Agricultural futures prices opened sharply lower and continued to trade lower for the day on Friday. At midday wheat and corn futures prices were down about 10¢-20¢ a bushel and soybeans were down about 20¢-25¢ a bushel. But prices for all three commodities already had traded sharply lower for the week with wheat prices down about 70¢-90¢ a bushel through March 10, corn down 25¢-45¢ and soybean down 40¢-60¢. Earlier pressure came from bearish US Dept. of Agriculture wheat supply and demand forecasts and from the general downturn in prices related to events in the Middle East and North Africa, among other factors.
Prior to this week’s sell-off, several commodity future prices had climbed to 2½ year highs.
But natural gas futures prices rose as demand could increase as Japan replaces some lost nuclear energy.