EU wheat drops to 2-week low on Ukraine grain corridor hopes

PARIS: Euronext wheat fell to a two-week low on Wednesday after Russia said it would allow Ukrainian food exports to resume by sea under certain conditions, raising hopes of a diplomatic solution to a blockade of millions of tonnes of grain.

Wheat also remained under pressure from weakening corn prices, linked in turn to US planting progress and China’s decision to allow imports of Brazilian corn.

However, Euronext wheat pared losses as traders were cautious about a deal being reached over a Black Sea corridor for Ukrainian shipments.

September wheat on Paris-based Euronext was down 7 euros, or 1.7%, at 403.50 euros ($430.82) a tonne by 1426 GMT.

It earlier fell to 399.50 euros, its lowest since May 11, with the opening of a chart gap fuelling early selling.

Technical support around the 400 euro threshold, along with a pullback in the euro against the dollar, helped underpin Euronext later, dealers said.

Chicago wheat was down nearly 3% in US trading while corn slipped to a new six-week low.

Russia is ready to set up a humanitarian corridor for vessels carrying food from Ukraine in return for the lifting of some Western sanctions, Interfax cited Russian Deputy Foreign Minister Andrei Rudenko as saying on Wednesday.

That drew attention to ongoing diplomatic efforts to free up Ukrainian grain stocks blocked by Russia’s three-month-old invasion, although traders said a deal remained uncertain.

“The devil is in the detail,” a European grain trader said. “It’s not in Russia’s interest to unblock Ukrainian ports without something in return.” Ukraine’s foreign minister rejected as “blackmail” Moscow’s suggestion it could allow a sea corridor in exchange for a loosening of sanctions.

Rain in dry winter wheat areas in the US Plains was also curbing wheat futures although crop conditions remained historically weak.

In France, the European Union’s biggest wheat grower that is also facing drought, traders were assessing forecasts for light rain next week after showers and cooler temperatures at the start of this week.