Wheat futures are plummeting on Tuesday as agricultural commodities joined the selloff in the broader financial markets. Wheat prices had been trending downward in recent sessions after reaching a 52-week high of $8.74. However, with the omicron variant decimating Wall Street, the crop fell victim to the bearish sentiment in the equities arena again.
March wheat futures declined $0.2775, or 3.37%, to $7.945 per bushel at 16:10 GMT on Tuesday on the Chicago Board of Trade (CBoT). Wheat prices are poised for a monthly drop of 0.5%, but they are still up nearly 24% year-to-date.
The demand outlook slumped among investors due to swelling fears of the omicron variant. The World Health Organization (WHO) has urged caution as officials continue to study the chief elements of the COVID-19 strain, such as reinfection risk and vaccine efficacy.
President Joe Biden’s confirmation that lockdowns are unnecessary at the moment failed to trigger confidence in the financial markets, leading to a wave of red ink across multiple asset classes.
But traders had turned bearish on wheat before the WHO spooked financial markets. According to the Commodity Futures Trading Commission (CFTC), money managers and hedge funds eased their bullishness on wheat contracts, adding just 3,000 contracts to their net-long positions in the week ending November 23. Despite being the largest addition in three months, the numbers were not strong enough to elicit ebullience among market analysts.
CFTC numbers also highlighted that investors enhanced their net-long positions in CBoT corn futures by adding approximately 25,000 contracts to their positions over the last week.
Australia, one of the largest markets in the world, announced that it would be raising its official estimate of the crop for the 2021-2022 marketing season.
“The wheat market went sharply lower after the Australian government came out with not only a record-large wheat crop but also record canola production and the second-largest barley production,” said Terry Reilly, senior commodities analyst with Futures International, in a note. “That initially sent negative sentiment into the wheat market, which spilled over into corn and soybeans.”
In other industry news, top wheat buyer Egypt acquired 600,000 tons of wheat from Romania, Russia, and Wheat.
In other agricultural markets, January corn futures shed $0.1725, or 2.92%, to $5.6525 per bushel. January soybean futures declined $0.2025, or 1.63%, to $12.2125 a bushel. March coffee futures shed $0.0115, or 0.49%, to $2.3185 per pound.