Wheat eased after significant rallies, with CBOT September soft red winter wheat up $0.0025 at $6.7775 per bushel, while Kansas City September hard red winter wheat was down $0.0275 at $7.1725, and Minneapolis September spring wheat dipped $0.01 to $6.8225 per bushel. The market is experiencing volatility due to ongoing geopolitical tensions in the Black Sea, which have disrupted shipping and reduced grain intake at key ports like Chornomorsk, contributing to concerns about global supply.
Escalating missile and drone attacks by both Ukraine and Russia on vessels in the Black Sea and Sea of Azov have intensified risks to critical export routes. Ukraine's grain export capacity via its Black Sea ports has reportedly shrunk by about a third due to these strikes. Analysts, such as those from the Hightower Report, note that both warring parties are focused on limiting each other's export revenue, which is driving up wheat prices. Rabobank's senior grains and oilseeds analyst, Vitor Pistoia, suggested that the current market reaction might be less severe than in 2022 because this time the focus is primarily on export disruptions rather than broader production risks.
Despite the geopolitical concerns, US wheat export sales for the week ending July 9 totaled 235,102 metric tons, falling below trade estimates that ranged from 250,000 to 600,000 tons. This weaker-than-expected demand side data is tempering some of the bullish sentiment driven by Black Sea risks. However, the market has seen a substantial rally, moving CBOT wheat to a two-year peak due to short covering and follow-through buying, fueled by the Black Sea disruptions. According to DuWayne Bosse of Bolt Marketing, the market may be nearing a point where these export disruptions are fully priced in, potentially limiting further rallies unless US exports significantly increase. Managed money held over 62,000 net short CBOT wheat contracts prior to the latest advance, making the market vulnerable to sharp short-covering squeezes.
