GRAINS-Wheat hits 2-month high on Ukraine concerns; Corn firm, soy relieved
(Updates with US closing prices)
By Julie Gingersen
CHICAGO, Sept 22 (Reuters) – U.S. wheat futures hit fresh two-month highs on Thursday, buoyed by the threat of a deepening conflict in Ukraine and dry weather in Argentina’s growing regions and the U.S. plains, traders said.
Commodity funds hold a net short position in Chicago Board of Trade wheat futures, leaving the market vulnerable to short-covering episodes.
CBOT December Wheat
Corn futures followed wheat higher while soybeans drifted lower. CBOT December Corn
Wheat futures shrugged off the pressure from disappointing weekly US export sales and an upgraded International Grains Council global wheat production forecast for 2022/23.
Brokers instead appeared to be focused on fears of further disruption to the Black Sea grain trade, which has been partially restored by a shipping corridor from Ukraine. President Vladimir Putin on Wednesday ordered a Russian mobilization to fight in Ukraine and indicated he was ready to use nuclear weapons.
“Most of the time it’s just Russia and Ukraine and what’s happening over there,” said Jack Scoville, an analyst at Price Futures Group in Chicago, of the strength of CBOT wheat.
Also optimistic, Argentina’s grain exchange Rosario lowered its production forecasts for wheat and corn crops on Wednesday, reflecting the impact of a prolonged drought.
Dry conditions are taking over the southern US Plains, where farmers are planting the 2023 winter wheat crop. The weekly US drought monitor report showed “extreme drought” in 53% of Kansas, the top US state for winter wheat, up from 42% the week before.
“It’s still dry on the Plains, although there are a few showers. So there’s no benefit from the new crop,” Scoville said.
Trading in corn and soybean futures was subdued as brokers awaited results from the US crop of both crops, which is just beginning in the Midwest’s harvest belt.
Macro concerns weighed on markets a day after the US Federal Reserve raised interest rates for the third time, as expected, by 75 basis points and raised its interest rate target to the highest level since 2008.
“The Fed is effectively acknowledging that a recession is coming, but inflation will not fall quickly and there will be plenty of pain,” ING economists said in a statement. (Additional reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips; Krishna Chandra Eluri, Andrea Ricci and Grant McCool) (([email protected]; 1-313-484-5283; Reuters messaging: [email protected])) Keywords: GLOBAL GRAINS/ (UPDATE 3)
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