Wheat futures are sliding to finish the trading week as investors take profits and monitor the tensions brewing at the Russia-Ukraine border. The agricultural commodity has been off to an exceptional start in 2022 on strong global demand and supplies failing to keep up in this environment. Can wheat top $8 again?
March wheat futures tumbled $0.0675, or 0.85%, to $7.835 per bushel at 13:39 GMT on Friday on the Chicago Board of Trade (CBoT). Wheat prices will record a weekly gain of about 5.5%, adding to their year-to-date push of roughly 1.7%.
According to the US Department of Agriculture (USDA), export sales totaled 452,600 metric tons in the week ending January 13 for the 2021-2022 and 2022-2023 marketing seasons. This is higher than the market forecast of 175,000 tons.
USDA data also report that corn sales totaled 1.2 million tons for the marketing years, topping the median estimate of 500,000 tons. Soybean export sales climbed 1.2 million tons, higher than the market estimate of 700,000 tons.
Meanwhile, financial markets are keeping an eye on a potential conflict in Eastern Europe as Russia, Ukraine, and United States tensions escalate.
This could result in higher commodity prices, from energy to agriculture. This also includes wheat since Russia is the world’s largest wheat exporter.
“In recent years, Russia has climbed the ranks to become the largest wheat exporter in the world. The country has produced more than 85mt a season in recent years, and annual exports amount to close to 40mt, which makes up almost 20% of global wheat trade. Turkey and Egypt are amongst the largest buyers of Russian wheat, according to recent trade data,” said Warren Patterson, the head of Commodities Strategy at ING Think, in a note.
“In the proposed sanction package from the US Democrats, the food & agricultural industry is not mentioned. However, sanctions against financial institutions (and possibly even cutting Russia off from the SWIFT system) could make trade more difficult. Therefore, tough sanctions could still have an impact on agri exports, even if they’re not specifically sanctioned.”
In other agricultural commodities, March corn futures edged up $0.0075, or 0.12%, to $6.1175 per bushel. March soybean futures shed $0.0625, or 0.44%, to $14.195 a bushel. March coffee futures plummeted $0.0295, or 1.21%, to $2.407 per pound.