Grains Drop as Export Prospects Improve as Ukraine Tensions Ease

06:35AM Sep 03, 2014
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Wheat fell to the lowest in almost three weeks in Chicago and corn declined amid speculation that tension between Ukraine and Russia will ease, improving the prospects for the Black Sea region’s grain exports.

Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko largely agreed on steps toward easing the conflict in Ukraine, Putin’s spokesman said, denying Ukraine’s assertion that the leaders reached agreement on a truce. The two countries account for about 21 percent of world wheat exports, U.S. Department of Agriculture data show, and grain shipments have continued from the region even amid unrest.

"We’ve just got to wait and see how things develop," Dave Norris, an independent grain broker in Harrogate, England, said by phone. "The markets certainly seem to think it’s bearish news" that the countries may reach an agreement, he said.

Wheat for delivery in December fell 1.3 percent to $5.48 a bushel at 5:11 a.m. on the Chicago Board of Trade. Earlier the price touched $5.4475, the lowest since Aug. 14. In Paris, milling wheat for November delivery dropped 0.6 percent to 172.50 euros ($226.70) a metric ton on Euronext.

Corn for December delivery fell 1 percent to $3.60 a bushel in Chicago, after touching $3.59, the lowest since Aug. 12 when it reached a four-year low of $3.58 a bushel. Soybeans for November delivery declined 0.7 percent to $10.2475 a bushel.

Unrest in Ukraine has roiled grain markets in recent weeks even amid prospects for bumper global harvests. Ukraine, the U.S. and Europe accuse Russia of dispatching soldiers and backing pro-Russian rebels in fighting. Russia, which is facing further sanctions as early as this week over the unrest, has repeatedly denied involvement.

Wheat prices also fell today before Egypt, the world’s biggest importer, issues a tender to buy the grain. The country last bought 175,000 metric tons of Romanian and Russian wheat in a tender Aug. 26.