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Commodities Corner: Wheat rallies to 3-month high as Russia’s attacks on Ukraine raise risks to Black Sea exports


Wheat rallied Monday, with futures prices for the commodity trading at their highest since late June, as Russia’s fresh barrage of attacks in Ukraine threatened exports of the grain through the Black Sea.

Wheat was “up strongly on what happened over the weekend between Ukraine and Russia, and on ideas off an increased nuclear threat from Russia on Europe,” Jack Scoville, a vice president and grains analyst at The Price Futures Group, told MarketWatch.

Russian President Vladimir Putin said his country’s barrage of attacks across Ukraine were made in retaliation to Ukraine’s attack on a bridge to Crimea and other attacks, which Russia described as “terrorist” actions, the Associated Press reported Monday.

“Uncertainty about the future availability of existing Russian and Ukrainian wheat supplies is driving prices right now, and headlines are feeding the uncertainty,” said Sal Gilbertie, president and chief investment officer at Teucrium Trading.

“Wheat is still in a wartime market; volatility based upon headlines is to be expected from this point onward,” he said.

“ “Wheat is still in a wartime market; volatility based upon headlines is to be expected from this point onward.””

— Sal Gilbertie, Teucrium Trading

In Monday dealings, the most-active December wheat futures contract

rose 67 ½ cents, or 7.7%, to $9.47 ¾ a bushel in Chicago. Prices were trading at their highest since late June, according to FactSet data.  

Scoville said the grain export deal for Ukraine “might come to an end soon enough and if things get out of control, we could lose access to the Black Sea. We will know soon!”

Russia and Ukraine had reached a deal in July, backed by the United Nations, to resume exports of Ukrainian grain through the Black Sea for the first time since the Russian invasion in late February.

On Saturday, however, an explosion damaged Russia’s Kerch Strait Bridge, which connects Russia to occupied Crimea and has served as a conduit for Russia troops in southeast Ukraine.

Traders have taken notice following damage to the bridge, as well as “Russia escalating its bombing of civilian centers, energy plants, and the capital city of Kyiv,” said Darin Newsom, president of Darin Newsom Analysis.

Fundamentally, there are a few key issues, including whether or not Ukraine will get any of its winter wheat planted this fall, he told MarketWatch. “It’s starting to look like that answer is no.”

Added to that, “Australia has seen heavy rainfall and flooding over parts of New South Wales, including some wheat growing areas,” said Newsom. “This could lower what was expected to be near record production potential.” 

Corn and soybean futures also moved higher, with December corn

up 20 ½ cents, or 3%, at $7.03 ½ a bushel and November soybeans

trading at $13.78 ½ a bushel, up 11 ½ cents, or 0.8%.

The situation in Ukraine is “likely playing a role in the corn market” on Monday, said Newsom.

In the U.S., “newly harvested bushels that haven’t already been sold are likely being locked away in private storage until next spring,” he said. 

“China is also reportedly in the market for more corn in 2023, and the U.S. is the world’s largest exporter, said Newsom. “This sets the stage for a similar situation to what we saw last year when competition for U.S. cash bushels spiked the market into the late spring.”

The U.S. Department of Agriculture will release its monthly World Agricultural Supply and Demand Estimates on Wednesday.

Wheat, corn and soybeans are finding support from ideas that the USDA report Wednesday “will show less production and ending stocks, and be bullish” for prices, said The Price Futures Group’s Scoville. “I can think that way on corn, but harder to think that for beans — but we will know soon enough.” 

Market Extra: U.K. bond yields surge as Bank of England emergency bond-buying program set to expire

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