Chicago wheat prices drop near four-month low as Russian exports are expected to rise

Chicago wheat futures dropped on Monday toward a four-month low hit last week. Expectations of higher Russian wheat exports drove the fall, even though demand for US grain remains strong.

Market Moves

On the Chicago Board of Trade, the most-traded wheat contract fell 0.3 percent to $6.01-3/4 a bushel. Meanwhile, corn rose 0.4 percent to $4.49-1/2 a bushel and soybeans gained 0.2 percent to $12.37-1/4 a bushel. These gains for corn and soybeans came after sharp drops in recent weeks brought in bargain buyers. Overall, wheat prices are down nearly 25 percent from their early September peak. Corn has dropped nearly 20 percent from its September high, and soybeans have lost about 8 percent.

Supply and Demand

Expectations of more Black Sea shipments grew after sources stated that Russia let grain vessels leave the Sea of Azov for the first time since July 10. The Russia-Ukraine war previously disrupted Black Sea exports and pushed prices up in August. However, global supplies turned out less scarce than some predicted. At the same time, US wheat and soybean exports are running fast due to the lower prices. On the regulatory side, large speculators grew their net short position in wheat by the week ended October 27, while the European Commission trimmed its harvest estimates for wheat and corn on Friday.

Context

Agricultural commodity markets are heavily influenced by global supply routes and geopolitical events like the conflict in the Black Sea region. Speculative trading by large investors also plays a major role in driving short-term price swings for crops like wheat, corn, and soybeans.