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Wheat Surges Following Russian Attack — Daily Grain Highlights

By Kirk Maltais

 

--Wheat for July delivery rose 5.1% to $10.93 a bushel on the Chicago Board of Trade Monday, with traders reacting to news that Russia had attacked Ukrainian port cities, even as concerns about food supply is keeping hopes for a restart of Ukrainian shipments high.

--Corn for July delivery rose 2.1% to $7.42 1/2 a bushel.

--Soybeans for July delivery rose 0.1% to $16.99 1/4 a bushel.

 

HIGHLIGHTS

 

Dogs of War: CBOT wheat futures were higher all day, in reaction to Russian missile strikes on the Ukrainian port city of Mykolaiv--which has amplified doubts that Russia will agree to allow grain shipments out of Black Sea ports. "Doesn't particularly send the right message to the market that Russia is keen on allowing food supplies to the world while at the same time actively destroying them," said Richard Buttenshaw of Marex in a note.

Crossover Effect: The momentum that gripped wheat futures on the CBOT today also provided corn with a lift. "Corn was up all day off the Russians shelling export elevators in Ukraine and effectively taking an export corridor off the table with their actions," said Charlie Sernatinger of ED&F Man Capital in a note--adding that technical considerations also provided support for corn Monday, although it's not likely to be a lasting source for that support. "Unless we turn the blowtorch on the Midwest weather, this is nothing more than a short covering rally in a bear market," he said.

 

INSIGHTS

 

Steady Level: U.S. grain export inspections mostly maintained shipment levels on par with last week, according to the USDA's latest grain export inspections report. The USDA said that corn inspections totaled 1.43 million metric tons for the week. That's up slightly from 1.41 million tons last week. Meanwhile, U.S. soybean inspections totaled 350,416 tons for the week, down from 403,617 tons the previous week--and wheat inspections totaled 352,779 tons, up from 344,907 tons last week. Mexico was the top destination for all three grains, while China was only a leading destination for corn.

Wet Lands: Precipitation is expected across the Corn Belt this week, which comes as U.S. planting wraps up in the next week or two. According to the latest forecast from DTN, showers that hit dry areas of the Southern Plains as well as wet eastern areas over the weekend is expected to continue throughout the week. Meanwhile, North Dakota is expected to be dry, allowing farmers to get into the fields in what's been a delayed planting season there.

Conservative Stance: Fund traders are relatively conservative in their holdings of corn futures, according to the latest commitment of traders report from the CFTC. Funds are now net long by nearly 269,000 contracts as of Friday's report--which while large, it is not as big as this point last year. Given the risk factors on the market this year, this may create room for prices to push higher, said Craig Turner of Daniels Trading in a note. "If weather gets hot and dry in North America and the Russian/Ukraine war rages on with no good solution for Black Sea exports, the funds have room to add onto positions," he said.

 

AHEAD:

 

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--The USDA will release its monthly world supply and demand report at noon ET Friday.

 

Write to Kirk Maltais at kirk.maltais@wsj.com

 

(END) Dow Jones Newswires

June 06, 2022 15:24 ET (19:24 GMT)

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