(Bloomberg) — Wheat was higher as traders braced for the US Department of Agriculture’s monthly supply demand report that’s expected to show declining domestic and world grain supplies.
Most classes of American wheat are likely to show production declines when the USDA updates its outlook in a report due Wednesday, according to a Bloomberg survey of analysts. That’s after dry conditions hit crops when farmers had already pared back planting. Global supplies of wheat and corn are also expected to decline, with the US corn yield edging downward.
The report comes as escalating attacks between Russia and Ukraine raise worries about disruptions of exports out the Black Sea while heat waves across the Northern Hemisphere stress fields. The Black Sea is the primary export gateway for Russia and Ukraine, which together account for over a quarter of world wheat shipments and a 10th of corn.
Attacks by both sides on grain infrastructure and vessels in the region have renewed concerns over the reliability of shipments and are a key driver for prices. Turkey temporarily halted Black Sea transits for its vessels over the weekend amid heightened security risks.
“Global fundamentals are strengthening,” the Hightower Report said.
The most-active wheat futures in Chicago rose as much as 2.5% to the highest price since July 30, before paring gains.
Still, the latest regulatory data Friday showed investors adding to net bearish bets in Chicago wheat futures as world supplies remain ample. The USDA last month hiked its production estimates for Russia and Ukraine wheat, even as attacks at the time risked their exports.
“The overly bearish sentiment for wheat has shifted to neutral,” Total Farm Marketing analyst Naomi Blohm said. “All eyes on global production numbers in this week’s USDA report.”
–With assistance from Ben Westcott, Eleanor Thornber and Hallie Gu.
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