Renewed woes over Black Sea grain deal send wheat prices upward

Russia’s threat to bypass a landmark grain deal underpinned prices, with Chicago wheat futures climbing more than 1% on Monday, rising for the first time in four sessions.

Corn prices eased, weighed down by improved weather outlook for U.S. spring plantings.

“Rising Black Sea tensions could underpin U.S. wheat futures…,” said Terry Reilly, a senior analyst at Futures International.

“The Ukraine export deal is set to expire in May and Türkiye is looking to extend it. Meanwhile, Russia would like to broker a deal that includes fertilizer exports,” Reilly noted.

The most-active wheat contract on the Chicago Board of Trade (CBOT) gained 1.1% at 6.82-3/4 a bushel, as of 4:32 a.m. GMT. Corn fell 0.2% to $6.42 a bushel while soybeans added 0.3% to $14.96-1/4 a bushel.

Russia on Friday threatened to bypass the Türkiye and U.N.-brokered grain deal unless obstacles to its agricultural exports were removed. At the same time, talks in Türkiye agreed removal of barriers was a necessary condition for extending the agreement beyond next month.

Russian Foreign Minister Sergei Lavrov said he and Turkish counterpart Mevlüt Çavuşoğlu discussed “a failure” to implement the terms of the deal.

He said Russia could work outside it if Western countries maintain what he said were obstacles to agricultural exports that were getting tougher.

The Türkiye-brokered Black Sea grain deal is an attempt by the United Nations to ease a food crisis that predated the Russian invasion of Ukraine, but was made worse by the most deadly war in Europe since World War II.

The deal, first signed by Russia, Ukraine, Türkiye and the U.N. in July last year and twice extended, allows for the export of food and fertilizer, including ammonia from Ukraine’s Black Sea ports of Odessa, Chornomorsk, Yuzhny/Pivdennyi.

While the West has not placed sanctions on Russia’s food and fertilizer exports, Moscow says they are compromised by obstacles – such as insurance and payment hindrances – that it says must be removed.

Russia and Ukraine are two of the most important producers of agricultural commodities in the world, and major players in the wheat, barley, maize, rapeseed, rapeseed oil, sunflower seed and sunflower oil markets. Russia is also dominant on the fertilizer market.

Since its signing, the 120-day grain deal has been extended twice, once in November and a second time in March, though Russia said the March extension was only for 60 days.

Meanwhile, forecasts for warmer, drier weather in the U.S. Farm Belt added to pressure on CBOT futures, as it will encourage corn and soybean plantings, traders said.

Grain traders are awaiting a monthly U.S. agricultural supply and demand report due on Tuesday.

U.S. soybean export sales totaled 155,300 tons for the week ended March 30, down 42% from the prior four-week average, the U.S. Department of Agriculture said. That was below analysts’ expectations for 200,000 to 600,000 tons. There were net cancellations of 48,300 tons for 2023/2024.

For corn, weekly U.S. export sales of 1.2 million tons for 2022/2023 were within analysts’ estimates. However, some were hoping for a bigger number after the U.S. Department of Agriculture recently made a string of daily sales announcements to China.

Agribusiness consultancy Safras & Mercado on Thursday raised its estimate for Brazil’s 2022/2023 soybean crop to 155.08 million tons from 152.43 million tons in a previous forecast.

Large speculators trimmed their net short position in CBOT corn futures in the week to April 4, regulatory data released on Friday showed.

The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and raised their net long position in soybeans.

Tags: Ukraine, grain deal, Russia, corn, export, prices, soybeans, wheat, futures, United Nations, fertilizer, Türkiye