Wheat futures plunge to multi-month lows amid bearish headlines

18 Aug 2022 | Mark Shenk, Masha Belikova

US wheat futures tumbled Thursday to the lowest levels since Russia's invasion of Ukraine in February as a spate of bearish news ranging from rising Ukrainian shipments to falling US export sales sent traders heading for the exits. 

Turkey's President Recep Tayyip Erdogan and United Nations Secretary-General Antonio Guterres met with Ukrainian President Volodymr Zelenskyy on Thursday to discuss a variety of issues including grain exports.  

"Wheat was down on the UN trying to negotiate a cease-fire in Ukraine, with European values in the tank following Russian cash prices into the sewer," Charlie Sernatinger of ED&F Man told Agricensus.

"Russian prices are offered down to $315/ton, don’t bid $305 unless you want to own it," Sernatinger said.  

As of 1222 Eastern time, Chicago SRW futures were down 4% on Wednesday's settlement, with September trading at $7.33/bu and December at $7.49/bu.

Kansas City HRW futures were also down around 4.7%, with September at $8.11/bu and December at $8.13/bu.

The Minneapolis March contract declined about 3.5%, with September at $8.53/bu and December at $8.65/bu.

For the US, a slow export pace also added to the falling prices. 

"We had a marketing year low in exports this morning, at a time when we should be having our best sales of the marketing year," Brian Hoops, president at Midwest Market Solutions, told Agricensus.

"There are reports of another three ships leaving Ukraine, bringing the total to 24. The IGC raised wheat exports at 13 million mt vs. 10 million mt previously, so all the news is negative," Hoops continued. 

The decline accelerated after falling below technical support levels, which spurred additional selling, market sources said.

"Wheat broke key technical support, setting off sell stops," Hoops said.

Expectations of better weather for crop areas in what-growing regions added to the downward pressure on prices. 

"Domestically we have better rains forecast for the HRW regions. That's more of a July 23 futures story, new crop that's not yet planted, but we do see July 23 down almost as much as nearby futures.

We are getting wheat cash values in the cattle feeding areas down towards corn values which should lead to an increase in wheat feeding," Curt Strubhar of Advance Trading told Agricensus.