Wheat rose to the highest in almost three weeks in Chicago amid concerns that supplies from the Black Sea region will be disrupted as tension escalated between Ukraine and Russia.
Ukraine said a counteroffensive being waged by separatists in the country’s easternmost regions amounted to a Russian invasion, while the US said Russia may be directing attacks as fighting spread. Ukraine and Russia account for about 20 per cent of global wheat exports, according to the US Department of Agriculture. Speculators cut bets on declining prices in the past three weeks after holding the biggest net-short position at the end of July since a record bearish wager in January.
“It’s all a guessing game at this point,” Matt Ammermann, a commodity risk manager from INTL FCStone, said by telephone today from St. Louis Park, Minnesota. “With conflicting headlines, it creates fear in the market, and the funds are short so you’ll see buying.”
Wheat for December delivery rose 1.2 per cent to $5.6875 a bushel by 7:23 a.m. on the Chicago Board of Trade, and touched $5.75, the highest since 8 August. The grain is heading for the first monthly increase since April. In Paris, milling wheat for November delivery added 0.9 per cent to €175 ($231) a metric ton on Euronext.
Money managers were net-short in Chicago wheat by 50,668 futures and options contracts as of 19 August, compared with a bearish position of 71,968 contracts three weeks earlier, according to the US Commodity Futures Trading Commission. CBOT prices are still down about 6 per cent this year on the outlook for ample world grain supplies. Russia’s harvest of grains and pulses this year may be the biggest since the breakup of the Soviet Union, the country’s Grain Union said yesterday.
Corn for December delivery was little changed at $3.6525 a bushel, after earlier rising as much as 0.8 per cent. Soybeans for delivery in November increased 0.3 per cent to $10.2725 a bushel. Both commodities have tumbled this year on the outlook for record crops in the US, where ample rain and mild temperatures mean plants are maturing in the best condition in at least 20 years, USDA data show.
“For corn and soybeans, nothing has changed,” Ammermann said. “The weather has been good, there’s no risk of an early frost and yields should be increasing. I would think any type of rally in corn and beans would be met with selling.”
Bloomberg News edited by ESM
