Wheat Reaches Almost 3-Week High in Chicago on Black Sea Tension

06:46AM Aug 28, 2014

Wheat rose to the highest in almost three weeks in Chicago amid concerns that supplies from the Black Sea region will be disrupted as tension escalated between Ukraine and Russia.

Ukraine said a counteroffensive being waged by separatists in the country’s easternmost regions amounted to a Russian invasion, while the U.S. said Russia may be directing attacks as fighting spread. Ukraine and Russia account for about 20 percent of global wheat exports, according to the U.S. Department of Agriculture. Speculators cut bets on declining prices in the past three weeks after holding the biggest net-short position at the end of July since a record bearish wager in January.

"Many headlines are surfacing around the market, but it seems all are fearing a slow invasion from Russia," Matt Ammermann, a commodity risk manager from INTL FCStone, said in an e-mailed report. "This still may provide some fear for those near-record short Chicago wheat positions."

Wheat for December delivery rose 1.7 percent to $5.72 a bushel at 6:09 a.m. on the Chicago Board of Trade, and touched $5.75, the highest since Aug. 8. The grain is heading for the first monthly increase since April. In Paris, milling wheat for November delivery added 1 percent to 175.25 euros ($231) a metric ton on Euronext.

Money managers were net-short in Chicago wheat by 50,668 futures and options contracts as of Aug. 19, compared with a bearish position of 71,968 contracts three weeks earlier, according to the U.S. Commodity Futures Trading Commission. CBOT prices are still down about 5.3 percent this year on the outlook for ample world grain supplies. Russia’s harvest of grains and pulses this year may be the biggest since the breakup of the Soviet Union, the country’s Grain Union said yesterday.

Corn for December delivery rose 0.8 percent to $3.6775 a bushel, erasing an earlier 0.4 percent loss. Soybeans for delivery in November increased 0.5 percent to $10.285 a bushel.