Chicago wheat futures increased on Friday, nearing a two-month high, driven by concerns over escalating tensions in the Black Sea region due to Russia’s ongoing conflict with Ukraine. The most active wheat contract on the Chicago Board of Trade (CBOT) rose by 1.9% to $5.89-1/2 per bushel.
This uptick follows Ukraine’s accusation that Russia used strategic bombers to attack a civilian grain vessel, raising alarms about export supplies from this critical grain-producing area. While the market’s immediate reaction was moderate, analysts noted that the incident underscored the ongoing war’s impact on global grain supply.
In addition to geopolitical concerns, wheat markets are facing weather-related risks, with reports of rain damage affecting Russia’s spring wheat crop and drought conditions hampering winter wheat sowing in both Russia and Ukraine. Despite these challenges, the U.S. Department of Agriculture (USDA) raised its global wheat stocks forecast, which tempered market momentum.
Corn prices also rose for the third consecutive session, despite an unexpected increase in the USDA’s yield forecast, while soybeans firmed as well. The USDA’s updated forecasts surprised traders who anticipated a decrease due to dry weather.
Moreover, dry conditions in South America are further supporting corn and soybean markets, with soil moisture levels in key Brazilian states at their lowest in 30 years.
Weakness in the U.S. dollar and stabilizing crude oil prices have also contributed to the upward trend in grain markets.