Chicago wheat futures continued their decline from ten-month highs on Thursday, driven by traders’ speculation that forecasted rains in parts of Russia might stabilize the falling harvest estimates for the world’s leading wheat exporter.
Soybean and corn futures saw minimal movement after Wednesday’s dip, which followed a U.S. Department of Agriculture (USDA) report highlighting rapid planting progress in the U.S. Midwest.
A stronger dollar exerted pressure on all three contracts, making U.S. agricultural products more expensive for international buyers using other currencies. By 0426 GMT, the most actively traded wheat contract on the Chicago Board of Trade (CBOT) had dropped 1.2%, settling at $6.84-1/2 a bushel. This follows a surge to $7.20 on Tuesday, the highest price since July, prompted by Russian analysts cutting their harvest estimates by approximately 10 million metric tons due to dry conditions and spring frosts.
Concerns over Black Sea supply were further exacerbated by expectations of a smaller crop in Ukraine. However, weather forecasts suggest that rain this week might reach parts of southern Russia and Ukraine, although high temperatures could diminish its positive impact on crops.
“Prices are certainly overdone to the upside,” commented Ole Houe, director of advisory services at IKON Commodities in Sydney. He noted that while CBOT wheat prices are unlikely to fall sharply in the near term due to uncertainties surrounding Black Sea supply, they should decrease from July as northern hemisphere harvests bring more grain to the market. Additionally, prices are being supported by the possibility that India might soon begin importing wheat after a six-year hiatus to replenish its dwindling reserves and curb rising prices, sources informed Reuters.
In other commodities, CBOT soybeans edged up 0.1% to $12.14-3/4 a bushel, and corn rose 0.1% to $4.55-1/2 a bushel. A USDA weekly report indicated that U.S. corn and soybean planting is slightly ahead of the five-year average pace, with 83% and 68% completion, respectively. Meanwhile, Argentinian farmers are accelerating their delayed soybean sales, spurred by higher global prices and improved weather conditions aiding the ongoing harvest.
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