Wheat recovers, corn gains on export demand - CBOT

Long-term uncertainty is wreaking havoc on the market
calendar icon 18 March 2022
clock icon 2 minute read

US wheat futures rose on Thursday, with benchmark Chicago Board of Trade (CBOT) wheat shaking off early weakness, as traders continue to wrestle with supply disruptions from Russia's invasion of Ukraine, reported Reuters.

Markets are closely watching the talks to end the war in Ukraine, which Russia calls "a special military operation", but the Kremlin said there was no deal yet.

Wheat prices have been extremely volatile during the three weeks since the 24 February invasion, as the market is heavily reliant on exports from both countries through the Black Sea.

France's Strategie Grains said the war could remove from the world market in 2021/22 about 11 million tonnes of Black Sea wheat exports and some 12 million tonnes of corn exports.

As of 1:04 p.m. CDT (1804 GMT), CBOT May wheat was up 33-3/4 cents at $11.03 per bushel. May corn gained 26 cents at $7.56 a bushel and May soybeans were up 17 cents at $16.66-1/4 a bushel.

CBOT wheat bounced back after a 7% drop on Wednesday. The most-active contract has retreated from record highs set last week above $13 a bushel, but remains elevated as the conflict in Ukraine continues.

"At the end of the day, we have this uncertainty about what the longer-term supply outlook is going to be. As long as you have that, it is hard for the markets to fully capitulate," said Terry Linn, analyst with Linn & Associates in Chicago.

Also, updated monthly outlooks from the US Climate Prediction Center forecast that drought would persist across much of the Plains through June, threatening winter wheat production prospects.

Corn futures rose on brisk export demand. The US Department of Agriculture (USDA) reported US corn export sales in the week to 10 March at just over 2 million tonnes, topping trade expectations.

The USDA also confirmed sales of another 136,000 tonnes of corn to unknown destinations, the latest in a string of recent deals.

CBOT soybeans firmed, although the most-active May contract stayed inside of Wednesday's trading range. Soybeans drew support from soyoil and a rally in US crude oil futures back above $100 a barrel. Soyoil sometimes follows crude due to its role as a feed stock for biodiesel fuel.

However, a slowdown in export demand for US soybeans hung over the soy complex, capping rallies.

"It looks to me like the fill-in business to China has probably run its course," Linn said, noting a string of US soy sales to China and unknown destinations in recent weeks.

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