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CBOT Wheat Futures Surge as Adverse Weather Impacts Russian Yields

28 May 2024 8:07 am
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Mumbai, 28 May (Commoditiescontrol): Chicago Board of Trade (CBOT) wheat futures surged nearly 3% on Tuesday, reaching their highest level since July. This increase is driven by growing concerns that adverse weather conditions in Russia, a leading wheat exporter, are reducing yields and tightening global supply.

The most-active wheat contract on the CBOT rose 2.8% to $7.16-3/4 a bushel, briefly peaking at $7.20. This marked a significant recovery from a 3-1/2-year low of $5.24 a bushel in March when Russia exported record amounts of grain. Since that low, wheat prices have surged by 37%.

The U.S. markets, including the CBOT, were closed on Monday, adding to the momentum on Tuesday as trading resumed.

On Monday, Russian consultancy IKAR cut its forecast for Russian wheat production to 81.5 million metric tons and exports to 44 million tons. Just a month ago, IKAR had predicted production of 93 million tons and exports of 52 million tons. The sharp reduction is attributed to frosts damaging approximately 1.5 million hectares of crops, with potential damage rising to 2 million hectares. Drought conditions have also severely affected southern cropping regions, and weather forecasts show little rain in the coming days. Meanwhile, waterlogged soil in Siberia and the slowest sowing pace in six years further complicate the situation.

In addition to Russia's struggles, Ukrainian traders union UGA has downgraded its forecast for the country’s 2024 combined grain and oilseed harvest to 74.6 million tons from 76.1 million tons.

The European Union's crop monitoring service has also adjusted its outlook, trimming expectations for this year’s EU soft wheat and rapeseed yields, although it raised forecasts for barley and maize.

Conversely, India is likely to receive above-average monsoon rains this year, according to the weather office, which retained its April forecast. This could potentially lead to higher farm output, providing some positive news amid global concerns.

As adverse weather continues to impact major wheat-producing regions, the upward trend in wheat futures highlights the market's sensitivity to supply disruptions and the ongoing challenges faced by global agriculture.

(By Commoditiescontrol Bureau: 09820130172)


       
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