(April 1): Grain prices fell in Chicago — reversing earlier gains — amid optimism that the war in the Middle East could be nearing an end.
Oil prices — which have been one of the drivers of grain and oilseed prices lately — have pulled back in the last few days. Brent crude traded below US$100 a barrel on Wednesday after US President Donald Trump indicated that the US could exit the conflict with Iran within weeks, though attacks continued.
Wheat slipped as much as 2.4%, the most in more than a week, and corn and soybeans also retreated.
“There is a de-escalation narrative brewing,” Matt Ammermann, commodity risk manager at StoneX, said in a note.
Still, the Bloomberg Grains Spot Subindex capped a third monthly increase in March, climbing 2.6%. The war and effective closure of the Strait of Hormuz have choked flows of fertilisers and fuel from the Middle East, raising input costs for farmers worldwide. Higher oil prices have also increased demand for alternatives to fossil fuels.
See also: Sugar trade upended as war chokes flows from major refining hub
The grains market is also digesting the US Department of Agriculture’s prospective plantings report. Total US plantings for wheat, corn and soybeans came in about one million acres less than expected, StoneX chief commodities economist Arlan Suderman wrote in a note. The lower wheat acreage was in line with a global trend, he added.
The plantings' figures are likely to exacerbate risks to grain output worldwide.
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