Black Sea Conflict Drives Wheat Prices Amid Logistical Hurdles
The ongoing conflict in the Black Sea region continues to impact wheat markets, causing logistical hurdles and supporting prices. Russian shipping company FESCO has suspended applications for shipments due to increased risks, while two cargo vessels were recently attacked by Russian forces. This event remains a major issue as vessel traffic slows down, with analysts revising their expectations of Black Sea export volumes.
Despite the challenges in the Black Sea region, US export sales have been struggling, but are currently overshadowed by events overseas. The European heatwave is taking its toll on crop yields, with the UK expecting its smallest grain harvest since 1984 and French crops down over 20% year-on-year.
Sean Lusk, Vice President of Commercial Hedging at Walsh Trading, notes that managed funds are long KC wheat but short Chicago, while global fundamentals appear to be strengthening. The 50- and 100-day moving averages held this week, with stochastics in oversold territory potentially turning higher.