Wheat futures in Chicago saw a significant drop after Russian President Vladimir Putin suggested the possibility of a peace agreement for the conflict in Ukraine. This news prompted traders to take profits following a previous rise in wheat prices.
Following Putin’s comments, international soft wheat prices in Chicago fell by approximately $8, while the decline in Kansas was similar. During the session, an intraday loss of up to $12 was reported. The futures contract for wheat this month stood at around $270 per ton, decreasing by 2.5%. For the May contracts of next year, the drop was close to $8.
Mark Schultz, founder and CEO of Northstar Commodity, stated: “Putin’s comment is bullish in the short term, but that said, the grain sector is in overbought territory and was waiting for a reason to sell off.” The previous Wednesday, the benchmark contract had reached a high of $7.95 per bushel, following a 21% increase in August.
During an economic forum, Putin indicated that the possibility of a peace agreement existed, although he noted that the resumption of negotiations was complicated due to Ukrainian attacks on maritime transport and warnings from Kiev regarding Russian airspace.
However, some traders warned that Putin’s statements did not imply an immediate de-escalation of military tensions and that disruptions in Black Sea grain flows remained unchanged.
Analyst Gustavo López, director of Agritrend Consultores, analyzed that the market had held prices around $300 until just a few days ago. “The impact is due to speculation regarding what Putin suggested about a possible end to the war. Likewise, there is an underlying component of the global conflict that, regardless of this specific event, is influencing the prices of soybeans, corn, and oils,” he explained.
López also added that there has been a structural decline in global production, and although Russia possesses a large amount of wheat, exports are limited. He suggested that if a solution to the conflict were found, trade flows would restart, although logistical issues remain to be resolved. Should the war continue, limitations in logistics and freight insurance would significantly impact the market.
In conclusion, it is observed that market instability and speculation persist, reflecting both political and economic uncertainties in the current context.
Source: www.infobae.com
