Wheat Prices Plummet to 18-Month Low as Black Sea Grain Deal Optimism Soars
- 09-Mar-2023 4:14 PM
- Journalist: Robert Hume
SINGAPORE: Wheat futures slumped for a second day on Thursday and hit their lowest levels in 18 months. This was driven by anticipation that the Black Sea region would soon be shipping Ukrainian grains, causing prices to fall. Meanwhile, Soybeans and Corn climbed higher supported by an even further decrease in estimates for Argentine crops due to the ongoing drought conditions.
"Talks are ongoing to extend the export pact beyond mid-March for Ukraine to export out of Black Sea terminals," stated in a report.
Despite a slight dip earlier in the day, Wheat prices remain elevated on the Chicago Board of Trade (CBOT). Most-active contracts were last recorded at $6.85-1/2 a bushel, down 0.3%, after briefly hitting its lowest level since September 2021 at $6.83-1/2 a bushel. Meanwhile, Soybeans rose 0.1% to a price of $15.19-1/4 per bushel, while Corn gained 0.2% and settled at $6.26-1/2 a bushel. After being oversold, the market is now starting to look more attractive for buyers.
The U.S. Wheat market is facing strong competition from Russia and the possibility that a grain passage between Ukraine and Russia will be extended past this month, meaning more grains available on the global market.
Ukraine's President, supported by UN Secretary-General Antonio Guterres, asked for an extension to their current deal with Moscow, which allows for Ukrainian exports of grains through Black Sea ports during times of Russian aggression.
On Monday, Rebeca Grynspan, a top trade official at the United Nations (U.N.), is slated to meet with senior Russian officials in Geneva to explore ways of extending a deal between the two countries. Meanwhile, Argentina’s Rosario Grains Exchange has drastically lowered its forecast for the 2022/23 Soybean harvest due to an ongoing drought that is afflicting the country’s key agricultural region; this prediction is the lowest estimated since the start of this century, and further cuts may follow.
The new estimates have put the current cycle's soy crop at 27 million tonnes - down from the 34.5 million tonnes projected in last month's forecast, as well as the 27.5 million tonne harvest seen in the 2000/2001 season, when records were first kept by the Buenos Aires grains exchange.
At the same time, large speculators increased their net long position in CBOT Corn futures for the week ending on Feb. 14.