Rising Prices in Commodity Markets Amid Drought Concerns

Rising Prices in Commodity Markets Amid Drought Concerns

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The week started with a price rise in the commodity markets where drought concerns are on the agenda, with the exception of rapeseed, which fell both overseas and in Europe. In Chicago, wheat was up 1.8 percent, corn 1.2 percent, soybeans 0.3 percent and canola 0.5 percent. In Europe, milling wheat, maize and feed wheat also closed higher, while rapeseed fell, reports Agroforum.

Chicago wheat prices rose on Monday on concerns over drought-hit crops in key southern hemisphere exporters Australia and Argentina, but price gains were limited by large Russian export shipments.

Corn and soybean prices fell back early in the trading day as the weather continued to be right for harvest in the US, but sellers prevailed by the close.

Australia’s wheat production may fall due to hot, dry weather. In Argentina, sales of the upcoming wheat crop are the slowest in seven years, and the rainfall situation and next month’s presidential election are also affecting farmers’ decisions.

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“Wheat remains under downward pressure from huge export shipments from Russia, despite dry weather in Australia and Argentina.” – said Matt Ammermann, commodity risk manager at StoneX. “Markets are also starting to get saturated with news of war in Ukraine and are barely reacting to news of attacks on Ukrainian port facilities,” he added.

The first large grain ship has left a Ukrainian port on the Black Sea since Moscow cancelled an export licensing contract in July. Meanwhile, Russian air strikes on Ukraine’s Odessa region have caused “significant damage” to port infrastructure and destroyed some grain storage facilities.

“Despite the war, Ukraine’s farmers and grain network is functioning extremely normal”

“Traders are taking note of reports of grain ships leaving Ukraine despite the lack of Russian security guarantees,” Ammermann said. “Despite the war, Ukraine’s farmers and grain network is functioning extremely normal. The question is whether some shipowners will choose to ignore the war threats and sail from Ukraine, and how many will follow.”

In Europe, milling wheat was at €240.25 after a €4.5 rise, maize at €211 after a €1.75 rise, rapeseed at €440.75 after a €0.5 fall and feed wheat at £193.9 per tonne after a £4.5 rise for the next deadline.

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