By Kirk Maltais


-- Corn for July delivery fell 1.5% to $4.18 a bushel on the Chicago Board of Trade Friday, with traders cutting their exposure in long grain futures amid an uncertain peace process in the U.S.-Iran war and solid weather in U.S. growing areas.

-- Soybeans for July delivery fell 0.6% to $11.22 1/4 a bushel.

-- Wheat for July delivery fell 0.3% to $5.81 1/4 a bushel.


HIGHLIGHTS


Paring Risk: Grain traders continued to reduce their exposure to futures Friday, with risk premium covering developments in the U.S.-Iran war being removed while the outlook for threatening weather to nascent U.S. crops appears limited.

"War and weather premium exiting the market in quick fashion," said Brady Huck of EmpowerAg. "[It's a] full-on weather market, with outside macro market support fading."

Fund Unloading: Hedge funds entered into this week with sizable long positions in grains, even with previous CFTC Commitments of Traders Report showing cuts of tens of thousands of long contracts.

"Ag markets are trading mostly lower again this morning with fund selling continuing to weigh on the corn/bean markets," said Doug Bergman of RCM Alternatives in a note. A lack of news on fresh sales to China are keeping funds on the sidelines, he said.


INSIGHT


Bursting With Bushels: Crops planted this spring seem to be entering summer with little in the way of weather stress, keeping the supply status quo unchanged.

"The big crop narrative remains dominant," said Phil Flynn of Price Futures Group. "Traders are pricing in strong U.S. production potential with no major heat or drought threats materializing yet and hoping the Super El Niño means super yields."

Corn production is expected to be down from last year's record high, but is still seen landing at around 16 billion bushels, which is historically high. That said, summer weather is always a wild card, Flynn noted.

After the Fact: The outbreak of New World Screwworm is the top thing being watched in the livestock market, with how cattle moves depends largely on what happens next.

"After heavy selling earlier in the week, cattle futures staged a major reversal as traders shifted from 'selling the rumor' to 'buying the fact' following confirmation of the screwworm case," said Joe Davis of Futures International in a note. How cattle trades is likely to influence the movement of grain futures in the short term.

Dollar Flex: A stronger-than-expected U.S. labor report breaks the recent correlation between yields -- dollar and oil prices. Crude futures are slightly lower amid hopes of easing hostilities in the Middle East, while yields and the dollar rise. The two had been moving in lockstep recently, influencing the movement of other commodities.

May's surprisingly strong 172,000 payrolls print makes the Fed more likely to focus on cooling inflation than in bolstering labor markets, and odds of a Fed hike this year rise to 68% from 51% yesterday, according to CME.


AHEAD


-- The USDA is scheduled to release its weekly Grain Export Inspections Report at 11 a.m. EDT Monday.

-- The USDA is due to release its weekly crop progress report at 4 p.m. EDT Monday.

-- The EIA is scheduled to release its Weekly Petroleum Status Update Report at 10:30 a.m. EDT Wednesday.


-- Paulo Trevisani contributed to this article.


Write to Kirk Maltais at kirk.maltais@wsj.com


(END) Dow Jones Newswires

06-05-26 1542ET