Wheat set for fourth week of losses on Russia-Ukraine deal optimism

SINGAPORE: Chicago wheat lost more ground on Friday with the market poised for its fourth week of decline on growing expectations of a Black Sea deal which will allow Ukraine to continue shipping grains.

Corn and soybeans were also on track for a weekly drop, although losses were limited by a severe drought dragging down yields in key supplier Argentina.

FUNDAMENTALS

The most-active wheat contract on the Chicago Board of Trade (CBOT) slid 0.2% to $6.64-3/4 a bushel, as of 0138 GMT, corn added 0.2% to $6.12-1/2 bushel and soybeans lost 0.1% to $15.09-1/2 a bushel.

The wheat market is down for a fourth week, having lost more than 15% during the period, soybeans have given up less than 1% this week and corn is down more than 4%.

The U.S. wheat market has been under pressure from Russian export competition and expectations that the wartime grain corridor from Ukraine will be extended beyond this month, increasing available global supplies.

However, Russia on Thursday said the deal to ensure safe exports of grain from Ukraine’s Black Sea ports was only being “half-implemented”, raising doubts about whether it would allow an extension of the agreement.

La Niña has ended and ENSO-neutral conditions are expected to continue through the Northern Hemisphere spring and early summer of 2023, a U.S. government weather forecaster said on Thursday, with El Niño possibly forming during summer 2023 and persisting through the fall.

El Nino is a warming of ocean surface temperatures in the eastern and central Pacific which could boost precipitation, brightening the outlook for U.S. crops.

Extreme drought continues to reduce soybean and corn yields in Argentina.

The country’s soybean production for the 2022/2023 harvesting season is estimated at 29 million tonnes, down from 33.5 million tonnes previously estimated, the Buenos Aires grains exchange said on Thursday.

The exchange cut its estimate for 2022/23 corn production to 37.5 million tonnes, down from the 41 million tones previously expected.

Commodity funds were net sellers of CBOT corn, wheat, soyoil and soybean futures contracts on Thursday, traders said.

Funds were net buyers of CBOT soymeal futures, traders said.

Wall Street slid sharply on Thursday, pulled lower by bank stocks and jitters ahead of Friday’s employment report, while Treasury yields dropped on signs that the Federal Reserve’s restrictive policy is beginning to work as intended.