Chicago wheat and corn futures rose on Thursday to recover from two-month lows as liquidation by investment funds abated and traders saw supply tensions persisting despite talks to reopen Ukrainian ports blocked since Russia’s invasion.
A large wheat purchase by Egypt and a report the U.S. government may retroactively raise an ethanol blending mandate lent support to cereal markets.
Soybeans ticked higher for a second day, underpinned by export demand.
The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was up 1.2% at $/4 bushel.
On Wednesday, it touched its lowest since early April after a two-day slide.
Traders said the pullback in wheat was fuelled by diplomatic efforts to create a Black Sea shipping channel for Ukrainian grain, along with improved weather for North American and European crops.
However, there was caution about the likelihood of a deal over Ukrainian ports while fighting continues in Ukraine and as Moscow seeks sanctions concessions rejected by Kyiv and its Western allies.
“Hopes are high, but reality is harsh,” a China-based trader said of the situation in Ukraine.
Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Wednesday it bought 465,000 tonnes of wheat in an international tender.
The tender underscored the impact of the war, with no offers of Ukrainian wheat and few offers of Russian wheat despite expectations of a bumper crop in Russia.
Export restrictions in India were adding to global supply tensions.
India has allowed 469,202 tonnes of wheat shipments since banning most exports last month, but at least 1.7 million tonnes is lying at ports and could be damaged by looming monsoon rains, government and industry officials told Reuters.
Traders said there was chatter about interest in European Union wheat from millers in Asia that may now struggle to source supplies from India.
CBOT corn Cv1 added 0.8% to $/4 a bushel, after falling on Wednesday to its weakest since late March.
Soybeans Sv1 were up 0.7% at $17.02 a bushel.
U.S. President Joe Biden’s administration is likely to raise ethanol blending mandates for 2021 to above the figure it proposed in December, Reuters reported, citing sources, in what could boost corn demand in the fuel.
The dollar eased, crude oil edged down and share prices rose as talk of potential further Saudi oil output tempered inflation and growth concerns.
