By Onome Amuge
Wheat prices rose to a positive weekly finish, as supply concerns from the Black Sea region surfaced after Russia delivered a list of concerns about its Black Sea export corridor deal to the United Nations. The Russian government also said it was prepared to reject renewing its export corridor deal unless its demands were addressed.
Following the report, the most-active wheat contract on the Chicago Board of Trade (CBOT) soared 0.3 percent to $8.95 a bushel. The market also gained 1.7 percent in the week after finishing lower the previous week.
Terry Reilly, senior commodity analyst with Futures International in Chicago, remarked that the grain’s bullish ride was spurred by Russia’s threat not to renew the Black Sea safe passage agreement set to expire in November.
“The Russia Geneva U.N. ambassador warned Moscow submitted concerns to the United Nations over the Black Sea safe passage agreement and may not renew the deal next month unless demands are met,” Reilly explained.
Prior to this development, the UN-brokered deal had opened a safer path for grain shipments from major exporter Ukraine. This had in the meantime allowed resumption of exports which had been blocked following Russian President Vladimir Putin’s order to invade its neighbour in late February.
Wheat prices were further supported by reports of poor weather conditions in the South America region which raised expectations of a supply crunch.
Argentina’s two major grains exchanges in Buenos Aires and Rosario cut their forecasts for the upcoming wheat harvest as drought and low temperatures hit the crop, with little relief in sight for key farming regions and scant rains forecast in weeks ahead.
Meanwhile, U.S. forecasts of lower output supported prices for corn and soybeans, with both crops gaining over two percent in the week.
The U.S Department of Agriculture (USDA), in its latest monthly supply-and-demand report, said U.S. corn and soybean crops would be smaller than previously forecast, raising concerns about tight global inventories.
The agriculture agency also lowered its demand outlook, most notably for exports which will likely face stiff competition from South American crop shipments.