Wheat futures hit a new two-year high on Monday, reaching $6.87-1/2 a bushel before falling slightly to $6.78-3/4. This surge was driven by increased concerns over disruptions to Black Sea grain shipments following intensified attacks on vessels and ports by Ukraine and Russia. A Russian missile strike near Ukraine's Odesa port reportedly killed 10 people, further fueling fears about supply chain stability. Despite some easing in the intensity of attacks compared to the previous week, the market remains supported by the ongoing conflict, according to Matt Ammermann, a commodity risk manager at StoneX. Concerns persist about disruptions, though there's also relief that key Russian wheat export terminals like Novorossiysk have not yet been heavily targeted.
Corn and soybean futures also experienced gains. The most-active soybean contract in Chicago rose as much as 1.2% to $12.17-3/4 a bushel, building on its highest close in two months on Friday. Corn similarly advanced by 1.2% to $4.73-1/4 a bushel. These gains were supported by a jump in crude oil prices, with Brent crude advancing towards $90 a barrel due to escalating hostilities in the Middle East after Iran targeted vessels in the Strait of Hormuz. The appeal of biofuels, which utilize corn, was boosted by higher energy prices. Additionally, worries about potential dry weather in U.S. grain belts and robust Chinese demand for U.S. soybeans underpinned the price increases for these commodities.
Analysts noted that the extended gains for soybeans were particularly bolstered by the rising crude oil prices and significant sales of U.S. soybeans to China. For corn, in addition to crude oil's influence on biofuel demand, concern over dry weather forecasts for the U.S. this week and large purchase tenders from Korean buyers provided further support. While the immediate intensity of Black Sea attacks on grain terminals might have slightly decreased, the broader geopolitical tensions in both the Black Sea and the Middle East continue to create an environment of uncertainty that is reflected in rising agricultural commodity prices.
