Source: Ukragroconsult (Ukraine)
Grain prices in Chicago fell, reversing their previous gains. This happened amid optimism about a possible end to the Middle East war, Bloomberg reports. Grain prices Middle East thus reacted sensitively to geopolitical news.
Oil price decline supports grain prices Middle East trend
Oil prices, one of the key drivers of the grain and oilseed markets recently, have also fallen over the past few days. On Wednesday, Brent futures fell below $100 per barrel. President Donald Trump stated that the US could withdraw from the conflict with Iran within weeks. Nevertheless, hostilities continue.
Wheat, corn, and soybean price moves
Wheat prices fell by 2.4%, the biggest decline in a week. Corn and soybeans also declined.
“A de-escalation narrative is forming in the market,” Matt Ammerman, commodity risk manager at StoneX, noted in a commentary.
Contrasting monthly index gains and supply risks
Meanwhile, the Bloomberg Grains Spot Subindex recorded its third consecutive monthly gain in March, rising 2.6%. The war and the effective closure of the Strait of Hormuz have limited fertilizer and fuel supplies from the Middle East. Consequently, this has increased costs for farmers worldwide. Higher oil prices have also spurred demand for alternatives to fossil fuels.
USDA acreage report adds further pressure
The grain market is also reacting to the USDA’s crop acreage report. Combined wheat, corn, and soybean acreage in the US were approximately 1 million acres lower than expected, noted Arlan Suderman, chief commodity economist at StoneX.
He noted that the decline in wheat acreage is consistent with a global trend. Therefore, these data could exacerbate risks to global grain production.
