MarketsFarm — Ongoing harvests for corn, wheat and soybeans in the U.S. and a strong U.S. greenback are putting pressure on markets in the Chicago Board of Trade (CBOT). However, other factors have caused prices to come down during the week ended Tuesday.
While the war in Ukraine continues to rage on, negotiations persist between the United Nations and Russia in Moscow to extend a soon-to-expire deal allowing Ukrainian grain shipments on the Black Sea.
Terry Reilly, grains analyst for Futures International in Chicago, said reports that talks between the two parties were progressing are putting additional pressure on wheat prices.
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“There is still uncertainty over the Black Sea situation, but it looks like some of the tensions might be cooling a bit,” he said, adding that while wheat prices are coming down, the trade is still waiting on assurances that the agreement can be renewed next month.
“A lot of these shippers need to know ahead of time if (the deal’s) going to be extended,” Reilly said. “I think we’re seeing a lot of mixed views right now.”
Meanwhile, severe drought in the U.S. Midwest has caused water levels on the Mississippi River to fall to record lows, halting barge traffic.
“It’s keeping importers away, because they’re not sure if they can secure (soybeans) and corn in a timely fashion,” Reilly said. “It’s negative to the market because it slows the exports.”
He also mentioned a relative lack of Chinese demand for U.S. corn as well as favourable weather conditions in Brazil and Argentina as other factors for declining corn prices.
Reilly predicts prices for corn, wheat and soybeans to trade sideways to lower during the next week.
“We don’t know what’s going on in the Black Sea and the next headline could easily change the direction (where prices will go),” he said. “But my general consensus is that harvest pressure will limit any gains in the market.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
