Wheat futures on the Chicago Board of Trade edged lower on Tuesday, marking their first decline in four trading sessions. However, the drop was minimal as renewed fears over Black Sea supply disruptions, fueled by escalating conflict between Russia and Ukraine, provided a floor under prices. Meanwhile, soybean contracts saw modest gains, and corn prices held steady.
Market Movements and Key Price Levels
The most-active wheat contract slipped by 0.1% to $5.15 a bushel as of 0134 GMT. In contrast, soybeans managed a 0.1% gain, reaching $10.65-3/4 a bushel. Corn prices remained unchanged at $4.47 a bushel. The slight retreat in wheat follows a recent recovery from an eight-week low hit last week, a bounce largely driven by investors covering their short positions due to geopolitical anxieties.
Geopolitical Tensions and Supply Chain Threats
The primary factor capping the decline in wheat prices is the heightened risk to grain exports from the Black Sea region. Reports of fresh Russian strikes on Ukrainian port infrastructure have rekindled market concerns. Russian forces targeted port and energy infrastructure in Ukraine's Odesa region, a critical hub for agricultural exports, according to a senior Ukrainian official on Monday.
The attack sparked a fire that destroyed approximately 30 containers filled with flour and vegetable oil at the Pivdennyi port. This incident is part of a broader pattern, as Russia has intensified its assaults on the Odesa region in recent weeks, severely disrupting Ukraine's grain export logistics and creating uncertainty for global buyers.
Fundamental Factors Influencing Other Commodities
While war risks supported wheat, expectations of a record soybean harvest in Brazil are applying downward pressure on oilseed prices. Agribusiness consultancy AgRural revised its forecast upward on Monday, now projecting Brazil's 2025/26 soybean production to reach 180.4 million metric tons, up from its November estimate of 178.5 million tons. This bumper crop prospect is keeping a lid on significant price rallies for soybeans.
On the Russian front, domestic factors are also at play. The Sovecon consultancy reported on Monday that Russia's wheat sowing area is expected to decrease to 26.3 million hectares from 26.9 million hectares, driven by falling profitability for farmers. The average yield is also projected to edge down slightly to 3.2 tons per hectare from 3.3 tons.
Broader Financial Market Context
The commodities trading occurred against a backdrop of a holiday-shortened week where most major stock indexes opened higher on Monday. Notably, shares of chipmaker Nvidia rose, and the Japanese yen strengthened against the U.S. dollar after officials in Tokyo warned against sharp, one-sided currency movements.
Market participants are now awaiting key data releases, including US Durable Goods orders for October, Advance GDP figures for the third quarter, and Consumer Confidence data for December, which could influence broader risk sentiment.
