By Kirk Maltais
--Wheat for September delivery rose 8.6%, to $7.57 1/2 a bushel, on the Chicago Board of Trade on Monday, closing limit-up in reaction to fresh attacks on Ukraine's agricultural infrastructure.
--Corn for December delivery rose 6.2%, at $5.69 1/4 a bushel.
--Soybeans for November delivery rose 1.6%, to $14.23 1/2 a bushel.
HIGHLIGHTS
Fresh Fighting: Russian attacks on Ukrainian grain warehouses sent futures higher in morning trading, with the new attacks being seen as clear evidence of an escalation in hostilities by Russia. "Strikes continued on the sea port of Odesa as well, but drone attacks on Danube grain terminals were a new and very specific target near the Romanian border, very clearly targeting Ukraine's ability to export grains following the collapse of the Black Sea export agreement," said Matt Zeller of StoneX in a note.
What It Means: Wheat futures hit the limit-up of 60 cents a bushel early in the session, as traders viewed the newest round of fighting in Ukraine as a clear sign that reviving the Black Sea Grain Initiative is off the table. "It is now certain that there will be no grain deal soon for exports through the Black Sea," said Jack Scoville of Price Futures Group in a note. "The world access to wheat from at least one and perhaps both countries just got a lot more restricted." The big jump supported gains in other row crops, particularly corn.
INSIGHT
Extended Trend: Open interest in agricultural futures was up by 4% through the week ended July 21, according to JPMorgan Global Commodities Research, to $318.7 billion, which is a rise of roughly $10 billion from last week's report. Choppy geopolitics in the Black Sea along with hot-and-dry weather in the U.S. were cited as reasons. "Across the agri complex, we maintain an upside price risk bias off current levels into year-end, for grain and oilseed markets in particular, amid rising supply side constraints and more recently the possibility of upside risks for demand," said the firm.
Backseat Driver: As attention on the Black Sea geopolitical situation increases, the focus on hot and dry weather in U.S.-growing areas is becoming a secondary concern. "Pop-up storms over the weekend with additional chances of rain after this week's heat tempered early session buying," said Brian Splitt of AgMarket.net. "That suggests that the focus is Ukraine." Splitt adds that risk premium tied to dry and hot weather has largely been priced into futures, but that doesn't mean that weather will fade as a driver for grain markets, just that it's taking a temporary hiatus.
Laggard Pace: Inspections of U.S. grain exports are low for the week ended July 20, putting the yearly totals for corn, soybeans, and wheat behind their rate from last year. Corn export inspections totaled 309,981 metric tons, soybean inspections totaled 283,378 tons and wheat inspections came to 358,796 tons. Corn is down from the previous week, while soybeans and wheat are higher. Corn, is now 33% below the previous marketing year to date. Soybeans are 5.5% behind, and wheat is off by 17%.
AHEAD
--ADM will release its 2Q 2023 earnings report before the stock market opens on Tuesday.
--The USDA will release its monthly Cold Storage report at 3 p.m. ET Tuesday.
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
07-24-23 1541ET
