Chicago wheat futures fell nearly 2% on Tuesday after India said it would allow overseas wheat shipments awaiting customs clearance, introducing some relaxation after it banned exports of the staple in a move that had sent global markets rocketing.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 1.8% at $12.24-1/2 a bushel by 1050 GMT.
The contract had fallen as low as 12.00-3/4 just after the government statement.
“What is clear is that more volumes of wheat will come out of the country than what the market expected yesterday but that doesn’t seem to change the embargo in itself, which limited the fall in price,” a European trader said.
India banned wheat exports on Saturday, just days after saying it was targeting record shipments of 10 million tonnes this year, as a scorching heat wave curtailed output and domestic prices hit a record high.
The government had said it would only allow exports backed by letters of credit (LCs), or payment guarantees, issued before May 13, leaving some 1.8 million tonnes of grain trapped at ports.
Wheat received some support from a US Department of Agriculture report indicating the worsening condition of the US winter crop, deepening worries about supply in an already-tight market.
US urges India to reverse ban on wheat exports
The USDA on Monday rated 27% of the US winter wheat crop in good to excellent condition, down 2 percentage points from the previous week and below analysts’ expectations, while spring wheat was 39% planted, below expectations of 43%.
The significance of US crops has risen after the Russian invasion of Ukraine hampered shipments from the key Black Sea region and India’s unexpected export ban, exacerbating food inflation concerns.
Wheat importers in Asia on Monday scrambled to find new sources of supply after the Indian ban.
CBOT corn shed 0.9% to $8.02 a bushel, after touching a two-week peak in the previous session.
CBOT soybeans slipped 0.1% to $16.54 a bushel.
The USDA’s weekly crop progress report also showed farmers had planted 49% of their corn crop, in line with expectations, as warm and dry conditions across much of the Midwest finally allowed growers to push through delayed planting tasks.
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