Wheat Higher as Russia-Ukraine Concerns Grow

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Russia-Ukraine border tensions continue to have grain traders on edge. “Any intrusion by Russian troops into Ukraine would send world grain prices sharply higher,” said AgResource. “Any Russian/Ukraine skirmish would be exceptionally bullish grain with Russian ag exports embargoed in economic sanctions.” The Wall Street Journal reported today that the Biden administration has approved $200 million in new defensive military assistance to Ukraine, although the U.S. has also said that it will not provide direct military force in the event of a Russian invasion.

Macro market indicators were also providing a lift for grain futures today. “Corn and wheat are looking strong on the charts, aided by a lower dollar and robust crude oil prices, and soybeans seem keen to rebound from yesterday’s two-week lows as well,” said Matt Zeller of StoneX. For soybeans, yesterday’s crush report from NOPA showing an elevated crush rate is also lifting futures, Mr. Zeller said.

Although world events and macros are supporting CBOT grain futures today, what’s also driving prices in recent days is a general return to commodities by fund traders after a brief pullback. “After a somewhat discouraging performance last week, grain and soy markets have come roaring back,” said Dan Hueber of the Hueber Report. “One must suspect it is being stimulated by technical factors, fund money flow, and a desire to invest in commodities as an inflation hedge.”

Analysts surveyed by Dow Jones this week are forecasting an uptick in U.S. ethanol inventories, predicting a rise to above 23 million barrels. Analysts forecast stocks to be anywhere between 23.01 million barrels to 23.9 million barrels. If inventories hit the high end of expectations, then it’ll be the highest they’ve been since last February, when they surged to above 24 million barrels. Higher prices for crude oil have been supportive for grain futures, specifically corn. “Ag products are suddenly getting sucked into the crude oil rally, with demand for soybeans and corn expected to increase, dragging wheat along for the ride,” said Robert Yawger of Mizuho Securities USA.

 

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