(April 9): Wheat futures have moved higher in the face of growing signs of fragility in the ceasefire pact between the US and Iran in the Middle East, with any reigniting of tensions likely to threaten further supply chain disruptions and price rises for vital farm inputs.
Disagreements between the US and Iran over whether or not attacks by Israel on Lebanon undermine the agreement have threatened the deal just over 24 hours after it came into effect. Joe Davis, a director of commodities at brokerage Futures International in Illinois, said while there was some dip buying taking place in the market, the disputes over the ceasefire were “an escalation of war however you look at it”.
Wheat is a nitrogen-intensive crop, making it especially vulnerable to supply disruptions in the Strait of Hormuz, one of the world’s major trade corridors for fertiliser.
“Wheat is already bullish with the dryness in the Great Plains and the worsening crop conditions as we saw on Monday,” he said in an interview, referring to a summary from the US Department of Agriculture (USDA). “So that is why wheat is outperforming corn and soybeans on the ‘risk on’ move we have seen since the ceasefire lows.”
Leading wheat futures rose by as much as 0.7%, clawing back some of the sharp losses sparked by market relief over Wednesday’s ceasefire. The release of the USDA’s latest World Agricultural Supply and Demand Estimates report on Thursday is also expected to show a drop in US wheat stockpiles, according to a survey of analysts.
See also: Top aluminium makers hike US surcharge as war disrupts supply
Prices:
- Wheat was 0.7% higher at US$5.84 a bushel as of 12.31pm in Singapore
- Corn gained 0.3% to US$4.485 a bushel
- Soybeans was steady
Uploaded by Felyx Teoh
