Wheat Hit Two-month Low as Traders Ignore Russia’s Black Sea Warning Shots

Wheat futures hit a two-month low on Monday on rising estimates of Russian production and exports, analysts said, ignoring a Russian warship firing warning shots at a cargo ship on its way to Ukraine.

“Corn futures closed almost unchanged after matching a recent low from 2021, while soybean futures advanced.”

“Russia’s IKAR raised its forecast for the Russian wheat crop amid record weekly shipments.”

Markets’ muted reaction to Russia’s warning shots at the weekend suggests traders are waiting to see actual disruptions to grain exports from the Black Sea before reacting.

Earlier, wheat prices jumped in Asian trading after the Russian navy fired warning shots towards a cargo ship in the Black Sea to inspect it, amid continuing tensions in the main waterway, according to Bloomberg.

A dry goods cargo tanker was heading to the Ukrainian port of Izmail when it was fired upon by a Russian navy patrol ship, the Russian Defense Ministry said, after the ship’s operators ignored a search request.

It added that the ship was allowed to resume its journey after that, without clarifying the type of cargo – if any – that it was carrying.

Wheat futures rose nearly 1.2% before easing the gain to 0.3% at $6.56 a bushel, after falling 1.5% last Friday.

The USDA estimate for expected Russian wheat shipments, released on Saturday, rose to 48 million metric tons for the 2023-24 season. This means that almost a quarter of global wheat imports will now come from Russia.

Grain supplies in the Black Sea region are under threat after the expiration last July of a grain deal that allowed safe passage for ships exporting Ukrainian grain and other foodstuffs from ports near Odessa.

Fears remain high as well, after a Ukrainian drone attacked a Russian-flagged oil tanker about a week ago. However, wheat is still down about 17% this year amid bumper crops.

Tags: futures, markets, Ukraine, Russia, exports, corn, estimate, Production, wheat, crop, Black Sea