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Wheat Extends Advance Into Bull Market on Ukraine Unrest

March 13, 2014
DSC 0337 wheat
  

Wheat extended its advance into a bull market and corn climbed for a third day on speculation that escalating turmoil in Ukraine will reduce the country’s exports, and buyers may shift purchases to competitors including the U.S.

Wheat rose 24 percent as of yesterday from a January low, above the 20 percent threshold that marks the common definition of a bull market, and corn is up about 19 percent from its low. Ukraine is the third-biggest corn exporter and sixth-largest wheat shipper, and its Crimean region will hold a referendum March 16 on joining Russia. Even after months of political unrest, grain exports so far have continued as normal and planting is ahead of average, researcher UkrAgroConsult said.

"Grain traders are still focusing their attention on developments in Crimea," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a note. "In the event of a yes vote, shipment problems could be the result."

Wheat for May delivery rose 0.9 percent to $6.90 a bushel at 6:19 a.m. on the Chicago Board of Trade, after touching $6.965, the highest for a most-active contract since October. In Paris, milling wheat for November delivery climbed 0.4 percent to 204.75 euros ($286) a metric ton on NYSE Liffe.

Wheat rose 14 percent in 2014 in Chicago, surprising banks including Goldman Sachs Group Inc. that forecast prices would extend last year’s 22 percent decline.

 

Exports

 

U.S. exporters sold 556,072 tons of wheat in the week-ended Feb. 27 for delivery this marketing year, up 52 percent from the prior week, U.S. Department of Agriculture data show. The agency is scheduled to update its weekly export sales report today. The U.S. is the world’s biggest wheat exporter, USDA data show.

Corn for May delivery rose 0.8 percent to $4.925 a bushel today in Chicago, after advancing 2.1 percent in the previous two sessions. The grain topped $5 a bushel in intraday trading on March 7, the first time prices reached that level since August. In the week-ended Feb. 27, U.S. export sales for delivery this marketing year were 1.5 million tons, the highest in four weeks.

Soybeans for May delivery were little changed at $13.8775 a bushel. Futures are heading for a 4.8 percent retreat this week, after surging 14 percent from the start of February through March 7 as investors weigh the outlook for supply from Brazil, the biggest exporter.

Brazil’s soybean crop forecast was cut to 85.4 million tons yesterday by government forecaster Conab, which estimated last month a harvest at 90 million tons. The worst drought in decades parched crops in Brazil’s south and southeast in the past two months, while excess rain in the west delayed harvesting. Output is still set to rise from a record 81.5 million tons harvested last year, Conab said.

 

To contact the reporters on this story: Whitney McFerron in London at wmcferron1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net Sharon Lindores, Dan Weeks

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RELATED TOPICS: Wheat, Marketing, Global Markets

 
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