The price of wheat, which had tested record highs earlier in the Russia-Ukraine conflict, plunged as much as 7% after reports that talks between Russian and Ukrainian negotiators meeting in Turkey had made progress, dragging down agriculture related equities.
With traders selling off the risk premium attached to grains, wheat for May delivery (W_1:COM) settled -4% to $10.14 1/4 per bushel on the Chicago Board of Trade, the lowest settlement for a most-active contract since March 1, while May corn (C_1:COM) closed -3% to $7.26 1/4 per bushel and soybeans (S_1:COM) ended -1.3% to $16.43 per bushel.
ETFs: NYSEARCA:WEAT, CORN, SOYB
“A ceasefire or diminished hostilities could give markets some comfort that Russian and Ukrainian wheat supplies that were harvested last year, and now trapped in the war zone, could become more accessible to the world,” Teucrium’s Sal Gilbertie told MarketWatch.
Although CBOT grain futures fell Tuesday, the knock-on effects of supply and planting disruptions from the war likely will push agricultural prices to all-time highs even in the event of a breakthrough in peace talks, analysts at brokerage Rabo AgriFinance said.
According to Rabo, a 200M-bushel increase in exports for each commodity would increase the 2022-23 average on-farm price for corn by ~13% and wheat by ~50%; for wheat, that’s enough to push prices above record levels seen in 2012.
Seeing little upside left after big gains, Scotiabank analysts recently downgraded shares of CF Industries and Nutrien.