SINGAPORE: Chicago wheat futures gained more ground on Monday, underpinned by a weaker US dollar, with the market’s focus on talks this week to renew a Black Sea deal that will allow Ukraine to continue shipping grains.
Soybeans and corn rose on support from a severe drought that will impact output in key supplier Argentina. “The market is expecting a decision on the Black Sea grain deal this week,” said one Singapore-based trader.
“For soybeans and corn, steep cuts in forecasts for Argentina’s production are supporting prices.” The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.5% at $6.82-1/2 a bushel as of 0313 GMT, soybeans gained 0.5% at $15.13-3/4 a bushel and corn rose 0.1% to $6.17-3/4 a bushel.
The US dollar slid on Monday as authorities stepped in to cap the fallout from the sudden collapse of Silicon Valley Bank and with investors hoping the Federal Reserve will take a less aggressive monetary path.
A weaker dollar makes the greenback-priced commodity cheaper for buyers holding other currencies. The market’s attention is on talks to renew the Black Sea grain deal.
A top UN trade official will meet senior Russian officials in Geneva this week to discuss extending the deal. However, Russia’s foreign ministry said on Sunday that Russian representatives had not yet taken part in negotiations on extending the Black Sea grain deal.
Wheat set for fourth week of losses on Russia-Ukraine deal optimism
A historic drought ravaging Argentina’s crops is deepening the country’s economic crisis, crushing farmers across the Pampas, heightening default fears and putting at risk targets agreed with the International Monetary Fund (IMF).
The South American nation, the world’s top exporter of processed soybeans and No.3 for corn, is in the grip of its worst drought in over 60 years, which has led to repeated sharp cuts to soybean and corn harvest forecasts.
Large speculators reduced their net long position in CBOT corn futures in the week to Feb. 21, regulatory data released on Friday showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and raised their net long position in soybeans.
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