Wheat pauses for breath as Black Sea supply fears fuel rally
CANBERRA, Oct 3 (Reuters) -Chicago wheat futures took a breather in early trading on Thursday after surging to 3-1/2-month highs as drought in top producer Russia and a drone attack on a Ukrainian river port fuelled supply concerns.
Corn futures held close to a three-month peak, supported by higher wheat prices and strength in the oil market after an Iranian missile attack on Israel. O/R
Soybeans edged lower as weather forecasts suggested rain could soon fall in top producer Brazil, where dry conditions have slowed planting.
FUNDAMENTALS
* The most-active wheat contract on the Chicago Board of Trade Wv1 was down 0.3% at $6.13-1/4 a bushel at 0050 GMT after touching $6.17 on Wednesday, the highest since June 14. Prices are up 6% so far this week.
* CBOT corn Cv1 slipped 0.1% to $4.32-1/4 a bushel having hit $4.34-1/4, its highest since June 28, in the previous session.
* Soybeans Sv1 slipped 0.3% to $10.53-1/4 a bushel.
* All three contracts fell to four-year lows in recent months but have recovered some ground as central banks cut interest rates, the U.S. dollar weakened and adverse weather began to threaten supply. FRX/ USD=
* Oil prices rose for a third day on Thursday as Israel bombed central Beirut. Higher oil prices can boost demand for biofuel made from crops, and Middle East instability tends to lift wheat, traders say. O/R CLOc1
* Russia's Oryol region declared a state of emergency on Wednesday due to drought and the resulting winter crop damage, joining other key grain-producing regions that have done so following adverse weather.
* Winter wheat planting rates are at 11-year lows in Russia, which accounts for as much as a quarter of the global wheat exports, and there is little sign of rain in many cropping areas.
* Harsh conditions in Russia have led to market talk that it could restrict exports later this season. The country's grain exporters' union on Wednesday said recent export volumes were excessive and called for a quota mechanism to limit shipments.
* Consultants Sovecon cut their 2024/25 Russian wheat export forecast on Wednesday to 47.6 million metric tons from 48.1 million tons.
* Meanwhile, in Ukraine, another wheat exporter, officials said a Russian drone attack damaged a grain facility near the Danube river border with Romania, a reminder that the war between Russia and Ukraine could disrupt wheat supply.
* Dry weather also threatens upcoming wheat harvests in Argentina and Australia, where frost added to low rainfall to wipe more than a million tons off analysts' production forecasts.
* Speculators have been reducing their short positions in CBOT wheat and were net buyers again on Wednesday, traders said.
MARKETS NEWS
* MSCI's global equities index was down slightly on Wednesday while the dollar and oil prices rose, as investors digested U.S. economic data and anxiously awaited Israel's response to Iran's missile attack the previous day. MKTS/GLOB
Reporting by Peter Hobson; Editing by Alan Barona
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
