Chicago wheat futures pause

PARIS/CANBERRA: Chicago wheat futures consolidated on Tuesday after a sharp rebound in the previous session, with investors setting war risks to Black Sea trade against ample global supply and a rising dollar.

Corn and soybeans were also little changed, with pressure from the dollar and South American harvests offset by uncertainty over the US planting season.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.2% at $5.44 a bushel by 1151 GMT.

On Monday the contract had jumped 2.7% to pull away from last week’s 3-1/2 year low, as news of Russian attacks on the Ukrainian port of Odesa revived worries about war disruption to massive grain exports through the Black Sea.

Large short positions built up by investors during the recent decline in prices have made the wheat market liable to short-covering rallies, but analysts said huge supply in top exporter Russia hung over the market.

Forecasters are anticipating a third consecutive bumper harvest in Russia this year, which could contribute to record global grain production.

“Record Russian exports are already flooding wheat markets and putting pressure on prices,” Commerzbank analysts said. “There are now few signs of a recovery in the coming season.”

News that the European Union is discussing the introduction of import tariffs on Russian grain drew little reaction, given the relatively small volumes involved.

But traders are watching for the outcome of EU talks this week on whether to include cereals in limits on agricultural trade with Ukraine, the biggest grain supplier to the EU.

A rise in the dollar index, as investors turned their attention to a US Federal Reserve interest rate policy statement on Wednesday, curbed Chicago futures by making US grain more expensive overseas.

CBOT wheat is likely to bump along around current levels in the coming months, said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney, adding, “there’s too much wheat everywhere in the near term.”

CBOT soybeans inched down 0.1% to $11.86-3/4 a bushel and corn was up 0.3% at $4.37-1/4 a bushel. Like wheat, corn and soybeans have hit three-year lows in the past month but dryness in Brazil and parts of North America has encouraged prices to recover.