By Paulo Trevisani
--Corn for December delivery fell 1.5% to $5.06 a bushel, on the Chicago Board of Trade on Monday, as markets digested news that Russia ended the Black Sea export deal.
--Soybeans for November delivery rose 0.5% to $13.78 a bushel.
--Wheat for September delivery fell 1.2% to $6.53 3/4 a bushel.
HIGHLIGHTS
Rally Reversed: Corn and wheat futures slid, reversing an early rally fueled by news that Russia had walked out of the Black Sea exporting deal. The initial bullish sentiment turned into profit-taking, AgResource said in a report, "since the market had already feared the corridor closing, and that Ukraine's smaller [2023] corn/wheat harvest will be able to flow through Eastern Europe and down [the] Danube River to facilitate monthly exports" estimated at between 2.5 million and 3 million tons. "The weaker corn/wheat markets then applied modest selling pressure to soy which dropped November soybean futures back to unchanged," AgResource says.
Cooler Heads: Wheat prices lost steam as "cooler heads" prevailed to tame a rally sparked by Russia's decision to quit the Black Sea exporting deal, RCM's Doug Bergman said, adding the move was expected. The September contract fell after rising nearly 3% pre-market. "It's the market saying we are not surprised by this," Bergman said. The prospect of tighter supplies in the absence of a deal remains real, though. "I think there's a story that would support prices moving forward...Wheat has potential to move higher if we have production issues around the world."
Early Rise: Grain futures rose pre-market after Russia walked out of the Ukraine grain export deal. Dry weather also boosted prices, offsetting news of a weakening China economy. "With 64% of the corn and 57% of the soybean crop still in drought, the heat/dryness will pressure condition ratings and knife yield potential," AgResource said in a note. It added that the Black Sea Grain Corridor Initiative has delivered nearly 32M metric tons of Ukraine grains to world markets and Russia's move "produced a broad rally of world grain and oilseed prices."
Ships Sailed: Bulk carriers left the Port of Odessa after Moscow pulled out of a deal that allowed Ukraine wheat exports to be shipped through the Black Sea, spreading fears of a food crisis at importing countries in the Middle East and Africa. "Most ships have already left and there are no scheduled arrivals. It's very quiet," a port executive at Odessa said. Ukraine is one of the world's top grain exporters and the end of the deal comes as the next harvest begins.
INSIGHT
Better For Wheat: The suspension of the Black Sea grain deal between Ukraine and Russia is likely to have a larger impact on wheat than on corn, BMI Research said in a report published before Moscow said it was quitting the agreement. The global wheat market is reasonably tight while corn harvests have been plentiful, the company noted. The USDA is forecasting a 1.4% drop in global wheat exports this season while Brazil has had a record-setting corn harvest, and U.S. and Argentinian harvests are looking strong too. "The global wheat market is tighter than the global corn market and therefore more sensitive to--and prone to upward price runs on--negative supply side developments," BMI said.
Brazilian Corn Plentiful: Brazil's "safrinha" corn crop was 36% harvested in the center-south region as of last Thursday, AgRural analysts said in a note. It's an improvement from the previous week's 27% level, but still below the 53% share harvested at the same time a year earlier, they said. Rain and unusually cold temperatures are to blame for the delay, according to AgRural. A bumper crop remains likely, though. In the states of Mato Grosso and Goias, two major producers, "the dry weather that was predominant last week allowed for a speedier advance" in the harvesting work, the analysts said. AgRural estimates the safrinha output at 102.9M metric tons.
AHEAD
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
--The USDA will release its monthly livestock slaughter report at 3 p.m. ET Thursday.
-The USDA will release its monthly cattle on feed report at 3 p.m. ET Friday.
-The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.
--Costas Paris contributed to this article
Write to Paulo Trevisani at paulo.trevisani@wsj.com
(END) Dow Jones Newswires
07-17-23 1531ET
