{"id":11348,"date":"2023-05-20T08:21:20","date_gmt":"2023-05-20T12:21:20","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/black-sea-grain-deal-isnt-the-only-reason-behind-steep-drop-in-corn-and-wheat-prices\/"},"modified":"2023-05-20T08:21:21","modified_gmt":"2023-05-20T12:21:21","slug":"black-sea-grain-deal-isnt-the-only-reason-behind-steep-drop-in-corn-and-wheat-prices","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=11348","title":{"rendered":"Black Sea grain deal isn\u2019t the only reason behind steep drop in corn and wheat prices"},"content":{"rendered":"
\n

Grain prices have suffered sharp declines, with the latest extension of the Black Sea Grain Initiative only part of the reason why wheat futures recently posted their biggest daily decline since February and corn touched its lowest price since 2021.<\/p>\n

The Russian Federation confirmed its continued participation in the Black Sea Initiative for another 60 days, Ant\u00f3nio Guterres, secretary-general of the United Nations, told the press on Wednesday. The original deal between Russia and Ukraine, made with Turkey and the U.N., was reached in July of last year following Russia\u2019s invasion of Ukraine to allow the safe export of food and fertilizer. It has been renewed for months at a time.<\/p>\n

\n

This is \u201cgood news for the world,\u201d Guterres said. \u201cOutstanding issues remain,\u201d and representatives of Russia, Ukraine, Turkey and the U.N. will keep discussing them. <\/p>\n

Following the news, futures prices for grains fell sharply on Wednesday, with wheat futures posting a loss of 3.4% for that session, the largest one-day decline since Feb. 24, according to Dow Jones Market Data.<\/p>\n

On Thursday, the most-active July wheat contract
\n WN23,
\n -1.10%<\/bg-quote><\/p>\n

W00,
\n -1.10%<\/bg-quote>
\n touched a low of $6.05 \u00bd a bushel, the lowest intraday level since May 3. July corn
\n CN23,
\n +0.18%<\/bg-quote><\/p>\n

C00,
\n +0.18%<\/bg-quote>
\n traded as low as $5.47 a bushel Thursday, the lowest intraday since Oct. 27, 2021 and July soybeans
\n SN23,
\n -2.10%<\/bg-quote><\/p>\n

S00,
\n -2.10%<\/bg-quote>
\n settled at $13.33 \u00bc a bushel, the lowest finish since July 22, 2022.<\/p>\n

\u201cThe extension is certainly good news,\u201d said Brett Friedman, managing partner at Winhall Risk Analytics, but the \u201crecent price action in wheat, corn, and soybeans seems to indicate that the market anticipated that an extension was likely.\u201d<\/p>\n

Prices came off on the news, but \u201conly really resumed and confirmed the bearish trend that was already in place,\u201d he told MarketWatch. \u201cA true shock would have been no extension, which would have led to sharply higher prices as traders reacted to the unexpected.\u201d<\/p>\n

He pointed out that commodities, including agricultural commodities, have been on the defensive since mid-April. The Bloomberg Commodity Index
\n BCOM,
\n +0.11%<\/bg-quote>
\n has lost nearly 6% since mid-April, FactSet data show.<\/p>\n

Indeed, bearish sentiment was already \u201ccurrently present in grain markets,\u201d Sal Gilbertie, president and chief investment officer at Teucrium Trading, told MarketWatch. The grain markets have already been burdened by \u201cideal planting weather in the Northern Hemisphere, much needed rain in South America,\u201d and last Friday\u2019s monthly World Agricultural Supply and Demand Estimates report from the U.S. Department of Agriculture, which predicted large inventory builds in corn.<\/p>\n

The USDA report released on May 12 showed the U.S. corn crop projection at a record 15.3 billion bushels for the 2023\/2024 marketing year, up more than 10% from last year, citing increases in both area and crop yield. <\/p>\n

Wheat and corn are leading the way lower because supplies of wheat are at historically high levels in Russia, the world\u2019s largest wheat exporter, and supplies of corn in the U.S. and Brazil, the world\u2019s two largest corn exporters, are projected to increase \u201cdramatically\u201d this crop year, said Gilbertie. \u201cIt seems likely that grain prices in general will continue their trek towards the cost of production now that the supply constraints in markets finally seem to be easing a bit as global inventories rebuild.\u201d<\/p>\n

Meanwhile, demand for corn has seen a slowdown, said Darin Newsom, Barchart senior market analyst. That\u2019s \u201chighlighted by recent cancellations of export sales by China,\u201d he said.<\/p>\n

On the futures market, July corn broke through previous lows Wednesday, triggering increased selling interest from fund, investment and algorithm traders, and \u201cpanic selling from others holding either long futures position or actual cash bushels,\u201d he said.<\/p>\n

Read:<\/strong> Why wheat prices hit their lowest in over a year as key Russia-Ukraine grain-deal deadline nears <\/p>\n

The \u201celephant in the room for both corn and wheat is the extension of the Black Sea agreement,\u201d said Newsom.<\/p>\n

\u201cI don\u2019t think it is a big deal because Ukraine has little grain to move,\u201d with Russia having allegedly taken most of it over the last year, he said. But \u201cit is possible funds are using headlines to position themselves.\u201d<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Grain prices have suffered sharp declines, with the latest extension of the Black Sea Grain Initiative only part of the reason why wheat futures recently posted their biggest daily decline since February and corn touched its lowest price since 2021. 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