Posted on March, 30, 2022 at 09:25 am
Wheat plunged almost 8% and corn extended its decline as Russia signalled it will ease its attack near key Ukrainian cities.
Moscow has decided to cut military activity near Ukraine's Kyiv and Chernihiv, Russian Deputy Defence Minister Alexander Fomin said after bilateral talks in Istanbul. If realised, a pullback in the invasion could help ease the disruptions to global grains trade wrought by the war.
Wheat futures in Chicago sank as much as 7.9%, dropping below the US$10-a-bushel mark for the first time since early March and nearing the daily exchange limit. Corn fell as much as 3.6% to a three-week low, and Minneapolis wheat dropped by the maximum allowed. Russia and Ukraine are both major grain producers.
The price losses could offer some reprieve for global food inflation, which has been accelerating at a rampant pace. Still, futures remain high historically and analysts cautioned the announcement may not be a quick fix for exports. Ukraine ports have shut since the war erupted, stalling seaborne trade.
"The problem we have here is we have peace talks progressing, but we still have a bunch of hoops to jump through in order for Black Sea exports to start improving, and that includes lifting sanctions on Russia and restoring shipping out of Ukraine," said Terry Reilly, a senior commodity analyst at Futures International LLC in Chicago.
Traders are also awaiting key reports from the US due on Thursday, detailing spring planting intentions and quarterly grain stockpiles. The data will give an initial indication on how farmers are responding to both soaring input costs, as well as rising demand for crops from alternative origins amid the war in Europe.
Source: The Edge Markets