SINGAPORE: Chicago wheat futures inched higher on Tuesday, recouping some losses from the previous session, as supply concerns rose after Russia suspended its participation from a Black Sea pact that allowed Ukraine to ship grains.
Soybeans rose, although gains were limited by a better-than-expected condition of the US crop, while corn edged higher.
Global grain prices will continue to be volatile until the market is able to decipher the impact of Russia withdrawing from the Black Sea grain initiative, according to Rabobank senior grains analyst Dennis Voznesenski.
Ukraine has been building alternative avenues for exports since the start of the war, he said.
“However, they are not yet sufficient enough to entirely compensate for the loss of the Black Sea grain initiative.”
The deal allowing the safe Black Sea export of Ukraine’s grain for the past year expired after Russia quit and warned it could not guarantee the safety of ships in a move the United Nations said would “strike a blow to people in need everywhere.”
Moscow had previously threatened to leave over what it called a failure to meet its demands to implement a parallel agreement - easing rules for its own food and fertilizer exports.
There are still expectations the deal may be renewed, and the markets were well-aware of the risks for it to expire, analysts said.
Moscow said it would consider rejoining the pact if it saw “concrete results” on its demands, but that its guarantees for the safety of navigation would meanwhile be revoked.
Wheat flour prices rise sharply
The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.3% at $6.56 a bushel, as of 0343 GMT, and soybeans added 0.3% to $13.82-3/4 a bushel. Corn gained 0.6% at $5.09-1/4 a bushel.
Weekly condition ratings for the US soybean and spring wheat crops improved more than expected in the past week following rains in portions of the Midwest and Plains, US government data showed on Monday, while corn ratings rose in line with trade expectations.
The US Department of Agriculture (USDA) rated 55% of the soybean crop as “good to excellent” in its weekly crop progress report, up 4 percentage points from a week ago and above a range of trade expectations.
For spring wheat, the USDA rated 51% of the Northern Plains crop as “good to excellent”, up from 47% the previous week and above a range of trade expectations.
The agency rated 57% of the corn crop as “good to excellent”, matching the average analysts’ estimate and up from 55% the previous week.
In other news, US soybean processors crushed fewer beans than expected in June as the monthly crush slumped to a nine-month low, the National Oilseed Processors Association (NOPA) said.
Brazilian farmers had harvested 36% of the area planted for their second corn crop in the center-south region by the end of last Thursday, consultancy AgRural said on Monday, up 9 percentage points from the previous week.
Commodity funds were net sellers of CBOT corn, wheat and soyoil futures contracts on Monday, and net buyers of soybean and soymeal futures, traders said.
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