Wheat futures saw a slight downturn after experiencing significant rallies, as traders began to lock in profits following the surge. The market is currently weighing the impact of heightened tensions in the Black Sea region, which have caused considerable disruptions to critical grain export routes from Ukraine and Russia. Attacks on vessels in the Black Sea and Sea of Azov, along with reduced grain intake at certain Ukrainian ports like Chornomorsk, have fueled concerns about global wheat supply.
The U.S. Department of Agriculture reported that U.S. wheat export sales for the week ending July 9 totaled 235,102 metric tons, falling short of trade estimates that ranged from 250,000 to 600,000 tons. This weaker-than-expected demand on the U.S. side comes at a time when Black Sea supply disruptions are a dominant factor, pushing CBOT wheat to a two-year high.
The ongoing conflict has led to Ukraine losing approximately one-third of its grain export capacity via Black Sea ports. Russia, the world's largest wheat exporter, has also seen shipping restrictions in the Sea of Azov due to Ukrainian attacks, affecting about a quarter of its grain exports. While the current situation echoes the supply shock of 2022, analysts suggest that the market reaction might be more contained this time, with the focus primarily on export disruptions rather than broader production risks.
Specific contract movements included CBOT September soft red winter wheat easing to $6.77-3/4 per bushel, Kansas City September hard red winter wheat down to $7.17-1/4 per bushel, and Minneapolis September spring wheat reaching $6.82-1/4 per bushel. Despite the day's easing, the underlying geopolitical risks continue to provide market support, preventing a steeper decline.
