Wheat Drops to 2-year Low on Optimistic Supply Forecasts For the Northern Hemisphere

In response to recent rain in U.S. winter wheat-growing regions and favorable weather in other northern hemisphere suppliers, Chicago wheat fell for a third straight session on Wednesday, reaching its lowest level in 25 months. Corn and soybean prices declined as a result of the U.S. planting effort moving quickly.

In addition to the unfavorable weather forecast for the northern hemisphere, discussions on a UN-mediated agreement that permits the secure transport of Ukrainian grain across the Black Sea are set to take place on Wednesday, according to a report by commodities research firm Hightower. "All sides involved in the negotiations are expected to attend."

At 03:02 GMT, the most active wheat contract on the Chicago Board of Trade (CBOT) was down 0.1% to $6.08-1/2 a bushel after hitting a low earlier in the session of $6.07-1/4 a bushel, its lowest level since April 2021. Soybeans lost 0.5% to $14.03-1/2 a bushel and corn dropped 0.6% to $5.76-1/2 a bushel. The United States, Russia, and Europe's main three producers all have favorable weather, raising expectations for plentiful supply in the second half of 2023. According to the U.S. Department of Agriculture (USDA), the U.S. winter wheat crop rating as of Sunday was 2 points higher than the previous week at 28% "good to excellent".

According to figures released by the European Commission on Tuesday, soft wheat exports from the European Union in the 2022–23 season, which began in July, had reached 25.67 million tonnes by April 30. This is an increase of 9% from 23.46 million a year earlier. The Black Sea grain export agreement is being extended, and the wheat market is waiting for news.

The U.N.-mediated agreement on the secure transport of Ukrainian grain over the Black Sea will be discussed later in the day with participation from all parties, according to a senior Ukrainian source on Tuesday. However, a senior ministry official warned that due to a declining harvest, largely brought on by Russia's invasion, Ukraine's grain exports could drop to about 26 million tonnes in the 2023–24 season.

According to the USDA, corn planting was 26% complete as of Sunday, which is on par with the five-year average and only a bit less than the average analyst expectation of 27%. The U.S. soybean planting was 19% finished, above both the five-year average of 11% and the average expert prediction of 17%. On Tuesday, dealers reported that commodity funds were net sellers of CBOT grain and soy futures contracts.