{"id":7714,"date":"2023-05-12T07:07:47","date_gmt":"2023-05-12T11:07:47","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/why-wheat-prices-hit-their-lowest-in-over-a-year-as-key-russia-ukraine-grain-deal-deadline-nears\/"},"modified":"2023-05-12T07:07:47","modified_gmt":"2023-05-12T11:07:47","slug":"why-wheat-prices-hit-their-lowest-in-over-a-year-as-key-russia-ukraine-grain-deal-deadline-nears","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=7714","title":{"rendered":"Why wheat prices hit their lowest in over a year as key Russia-Ukraine grain-deal deadline nears"},"content":{"rendered":"
\n

Wheat futures have declined so far in 2023, after settling last week at their lowest prices in more than a year, pressured by \u201cabundant\u201d supplies, despite the usual uncertainty surrounding the potential renewal of the Black Sea grain export deal between Russia and Ukraine.<\/p>\n

The Black Sea Grain Initiative, brokered by the United Nations and Turkey in July of last year to supply global markets with food and fertilizer as the Russia-Ukraine war led to global shortages and rising prices, is due to expire on May 18. The deal had marked a 60-day renewal on March 18. <\/p>\n

\n

Turkey\u2019s state-run news agency Anadolu Agency reported that Turkey, Russia, Ukraine and the U.N. would begin two days of talks on the grain deal Wednesday. The talks would include discussions on the extension of the initiative and the development of plans for the return of merchant ships and their crews stranded in Ukrainian ports due to conflict conditions, the news agency said, citing Turkish authorities. <\/p>\n

Since the signing of the initiative in July, the U.N. estimated on March 18 that some 25 million metric tons of grains and foodstuffs had been moved to 45 countries. The deal has also been credited with helping to \u201ccalm global food prices, which reached vertiginous highs in March 2022,\u201d the U.N. said.<\/p>\n

\u201cWhile Russia is currently holding to its pattern of waiting until the last minute to confirm its agreement to a renewal, the fact remains that for every one bushel of wheat Ukraine has to export, Russia has four bushels,\u201d Sal Gilbertie, president and chief investment officer at Teucrium Trading, told MarketWatch. So, a renewal of the grain deal \u201cbenefits Russia more than it benefits Ukraine.\u201d<\/p>\n

<\/p>\n
\n

\n \u201c<\/span>\u201c\u2026the fact remains that for every one bushel of wheat Ukraine has to export, Russia has four bushels.\u201d \u201d<\/span>\n <\/p>\n


\n \u2014 Sal Gilbertie, Teucrium Trading<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

\u201cRussia loves to bargain and bluster before renewing the U.N. grain deal, but Russia benefits more than Ukraine from the deal and it can always agree to a deal and then degrade Ukraine\u2019s ability to export by attacking Ukrainian export facilities, which it has no hesitation in doing thus far,\u201d said Gilbertie. \u201cThat would be a win-win for Russia.\u201d<\/p>\n

Overall, wheat has been pressured by \u201cabundant supply availability\u201d from Russia where wheat inventories are currently running almost 80% higher than the five-year average,\u201d as well as the need for farmers to make room for this year\u2019s crop, said Gilbertie, with the harvest set to begin several weeks from now.<\/p>\n

Russian wheat export prices are \u201cthe lowest in the world right now\u201d because Russia is \u201cdesperate to move its old inventories out in order to make room for this year\u2019s large harvest,\u201d he said.<\/p>\n

On Wednesday, the most-active July soft red winter (SRW) wheat contract
\n WN23,
\n +1.20%<\/bg-quote>
\n traded in Chicago settled at $6.41 1\/4 a bushel, down 2 1\/4 cents, or nearly 0.4%. The settlement was the lowest since May 3, according to Dow Jones Market Data. Year to date, wheat futures have lost about 19%. They hit a a 52-week settlement low of $6.09 1\/4 on May 2. SRW wheat has excellent milling and baking characteristics for crackers and pretzels, according to the Nebraska Wheat Board website.<\/p>\n

Most active July hard red winter(HRW) wheat futures
\n KWN23,
\n +1.72%<\/bg-quote>
\n ended at $8.55 1\/4 a bushel, down 0.1%, or a penny, Wednesday after hitting a 52-week closing low of $7.71 1\/4 on May 2. Prices are down about 3.7% year to date. HRW wheat is used mostly used for bread, as well as all-purpose flour,.<\/p>\n

Given that agricultural futures are basically weather derivatives, and the weather across the U.S. Plains has reduced the production potential for HRW and SRW, that created what Darin Newsom, Barchart senior market analyst, referred to as a \u201crubber band disposition.\u201d That means the noncommercial and commercial sides of the market were being pulled in opposite directions, he said. <\/p>\n

\u201cWhen the rubber band breaks, it usually snaps back to its base,\u201d said Newsom, and in the case of commodities, fundamentals tend to \u201cwin in the end.\u201d He pointed out that for now, the Chicago SRW wheat market is fundamentally bearish as indicated by its futures price spreads, while Kansas City HRW wheat has rallied from its recent low on May 2. <\/p>\n

The Agriculture Department will release its monthly World Agricultural Supply and Demand Estimates report on Friday, potentially giving the markets for wheat and other grains their next market-moving piece of news. <\/p>\n

\u201cThis is one of the reports folks get all worked up over each year,\u201d said Newsom. But \u201cI think it is dramatically overhyped.\u201d<\/p>\n

Still, Newsom said he\u2019s expecting to see old-crop corn and soybean export projections reduced. <\/p>\n

Gilbertie, meanwhile, said that as far as potential surprises in the report, he\u2019d look at the 2023-to-2024 crop-year forecast.<\/p>\n

\u201cIf the USDA does not bump South American production on all levels up to at least trend line,\u201d meaning record high production of both corn and beans, then markets are likely to be surprised.<\/p>\n

\u201cMay is a big report so anything an happen,\u201d said Gilbertie.<\/p>\n<\/p><\/div>\n<\/div>\n

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

Wheat futures have declined so far in 2023, after settling last week at their lowest prices in more than a year, pressured by \u201cabundant\u201d supplies, despite the usual uncertainty surrounding the potential renewal of the Black Sea grain export deal between Russia and Ukraine. The Black Sea Grain Initiative, brokered by the United Nations and […]<\/p>\n","protected":false},"author":1,"featured_media":6925,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-7714","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nWhy wheat prices hit their lowest in over a year as key Russia-Ukraine grain-deal deadline nears | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Wheat futures have declined so far in 2023, after settling last week at their lowest prices in more than a year, pressured by \u201cabundant\u201d supplies, despite\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=7714\" \/>\n<meta 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