Grain Market Surges on War Premium

The grain market saw significant gains on Wednesday, with new contract highs in both winter wheat classes. December soft red winter wheat futures closed limit up at $7.48 1/4, while hard red winter wheat was up 38 cents at $8.08 3/4. Jim McCormick of AgMarket.Net attributed the surge to massive fund buying and short covering, adding a war or geopolitical premium to prices.

McCormick cited news that Russian President Putin had escalated tensions with Ukraine, dashing hopes for a ceasefire. This development added to fears about wheat availability from the Black Sea region, prompting a rush of bullish sentiment in the market. McCormick noted that up to 70 ships are waiting to enter Ukrainian ports, unable to export grain due to ongoing conflicts.

The corn market also reached new contract highs, with December futures closing 13 cents higher at $5.36 1/2 and September rising 13 1/2 to $5.14. McCormick suggested that the market is trying to ration demand based on smaller supply expectations. He noted that USDA estimates and recent crop tours indicate a potential yield of around 173 bushels per acre, which could lead to further price increases.

Soybean futures also made new contract highs, with November closing up 28 1/4 cents at $12.66. McCormick attributed this surge to a large sale of soybeans to China and the US's decision not to impose sanctions on China over its involvement with Iran. He expressed optimism about China's continued purchases, citing their pledge to buy 25 million metric tons of soybeans.