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Wheat falls at start of week after renewal of Ukraine grain deal

Wheat falls at start of week after renewal of Ukraine grain deal
The bulk carrier VALSAMITIS is loaded with wheat at the Black Sea port of Chornomorsk near Odesa, Ukraine, 18 February 2023 amid the Russian invasion. (Photo: EPA-EFE / Igor Tkachenko)

Wheat dropped following the renewal of an agreement that allows Ukraine to safely export grains out of key Black Sea ports, although the duration of the latest extension was disputed.

Ukraine’s Infrastructure Minister Oleksandr Kubrakov said over the weekend that the pact had been prolonged for another 120 days, but Russia and an unnamed Turkish official said the extension was only for 60 days. The top two commodities shipped under the deal are wheat and corn, which also fell.

Russia’s invasion of Ukraine sent wheat futures soaring in the first half of 2022 on concerns over severe disruptions to supply. The Black Sea Grain Initiative has enabled exports to flow since it was brokered by the United Nations and Turkey in July, contributing to a decline in food inflation.

Wheat futures in Chicago were 1.1% lower at $7.03 a bushel as of 10.58am in Singapore after posting the first weekly gain on Friday since early February. Maize slipped 0.6% to $6.3050 a bushel, the first drop in five sessions.

Ten regions in Ukraine have started planting spring wheat and barley crops earlier than in 2022, according to the Ukrainian Agrarian Ministry. However, the country’s farmers may only sow 8.7 million hectares of grain crops this year, more than 20% lower than the previous year, preliminary estimates show.

Soybean futures dipped for a second session, even after the Buenos Aires Grain Exchange slashed its forecast for Argentina’s crop to the smallest on record last week. The nation is enduring its ninth heat wave of the growing season, compared with a typical three or four.

Investors are also watching the banking sector for any impact on commodities after last week’s turmoil. Early readings of UBS Group AG’s agreement to buy Credit Suisse suggests sentiment is turning for the better. BM/DM


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