Wheat prices plummet after Russia says ready to allow Ukraine grain exports

Optimism that trade flow will improve sent wheat prices down as much as 5.7 per cent on May 31. PHOTO: REUTERS

CHICAGO (BLOOMBERG) - Wheat in Chicago tumbled to the lowest price in three weeks on the possibility that Russia will allow exports of Ukrainian grain through the Black Sea. Corn and soybean prices also fell.

Russia and Turkey discussed Black Sea shipments in a phone call on Monday. Russia said it is willing to help ensure Ukrainian exports, though the Kremlin provided no details.

"Using Turkey as a mediator between Russia, Ukraine, and the West is a risky move for onlookers in the US," said Farm Futures analyst Jacqueline Holland. "A potential deal could reduce supply pressure on global grain, oilseed and fuel markets. But Russia is not going to strike a deal without attempting to come out ahead of the West first."

Optimism that trade flow will improve sent wheat prices down as much as 5.7 per cent on Tuesday (May 31), even as prospects for opening Ukraine's ports remain unclear.

"Doubts remain about the reality on the ground, and about the conditions that the Russian President could still impose to authorise these exports." Agritel analysts said in a note.

Russian leader Vladimir Putin reiterated that his country can ship fertilisers and agricultural products if sanctions on Moscow are lifted. Russian wheat shipments rose 8 per cent in the past week to 329,000 tons, according to Interfax.

Ukraine's grain exports, which have been limited to rail and road routes since Russia's invasion blocked ports, plummeted 62 per cent in May versus last year, the nation's Agriculture Ministry said on Tuesday.

Most-active wheat futures in Chicago touched US$10.9125 (S$15) a bushel, the lowest since May 10, after grain markets were closed on Monday for a US holiday. Corn fell as much as 3.2 per cent to US$7.5275 a bushel while soybeans retreated as much as 2.5 per cent to US$16.89 a bushel.

Along developments out of the Black Sea region, traders are watching US grain plantings, especially in the Upper Midwest, where rainy and cool conditions are causing severe delays. The government will release its latest progress report on Tuesday afternoon amid concern that the farming challenges may curb production this year.

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