Russia-Ukraine Conflict Drives Up Global Grain Prices

The recent escalation of strikes between Russia and Ukraine has had a significant impact on global grain markets. Wheat prices have surged by 12%, or $0.85, for the trading week ending August 28th, while corn prices gained $0.28. The situation is attributed to the conflict's disruption of wheat exports from Ukraine and Russia, which account for 27% of global wheat shipments.

Market analyst Brad Matthews notes that the funds were previously short Chicago wheat but have likely switched to a long position due to the rising prices. Matthews predicts that if the current trend continues, wheat could reach $8 off Chicago December wheat, although he cautions that a close below $720 could indicate a reversal in price direction.

Corn has also been affected by the conflict and crop tour estimates, which showed a lower yield than expected. Matthews believes that corn prices could rally through harvest, citing counter-seasonal moves as a sign of strength. He notes that the funds' large net long position in corn is a concern for potential price pullbacks.

The heat dome returning next week may have more of an impact on soybean crops due to its effects on pod fill and weight. Matthews also highlights the importance of China's purchase obligations, which could add 86 million bushels to US carryout if yields are raised by one bushel.