Chicago wheat futures stabilized on Tuesday after a notable rally driven by export-disrupting Russian attacks on Ukrainian ports, which propelled prices up by over 2% in the previous session. Despite the recent surge, wheat prices linger near their lowest levels since 2020 due to ample global supply dynamics.
The most-active wheat contract on the Chicago Board of Trade (CBOT) remained unchanged at $5.42-3/4 a bushel, following a recent dip to $5.23-1/2, the lowest point since August 2020. The influx of competitively priced grain from leading exporter Russia, supported by consecutive strong production years and expectations for another robust harvest, has contributed to market pressures.
Recent Russian air strikes targeting agricultural facilities and industrial structures in Ukrainian ports, including Odesa and Mykolaiv, have raised concerns about disruptions to grain exports and escalated tensions between the two key grain-producing nations. Despite slight increases in Russian export prices, the market remains oversupplied, with expectations for CBOT wheat to maintain current levels in the near term.
Market vulnerabilities persist as speculators hold significant short positions in Chicago wheat, corn, and soybeans, potentially leading to short-covering rallies in response to price fluctuations. Commodity funds were observed as net buyers of CBOT wheat but net sellers of soybeans and corn on Monday, reflecting ongoing market uncertainties and speculative activities.
Soybean futures rose by 0.1% to $11.89 a bushel, while corn futures increased by 0.3% to $4.37-1/4 a bushel on Tuesday. Despite recent upticks, both contracts remain near multi-year lows due to abundant supply from the Americas, exerting downward pressure on prices amidst market volatility.
Analysts at Citi maintain a “neutral-bearish” outlook on CBOT wheat, corn, and soy over the next three months, projecting average year-end prices of $4.80 a bushel for wheat, $10.50 a bushel for soybeans, and $3.75 a bushel for corn. Supply dynamics and planting trends in key agricultural regions like Ukraine and Brazil continue to influence market sentiment and price forecasts amid evolving geopolitical and climatic conditions.
In Canada’s Alberta province, persistent drought conditions pose challenges for wheat and beef production, with farmers bracing for potential water restrictions impacting agricultural output in the region.