Russian export uncertainty driving U.S. wheat futures

(Lisa Guenther photo)

CNS Canada — Uncertainty over Russian exports has brought some volatility to U.S. wheat markets, with shifting speculation on the country’s intentions a major driver in day-to-day futures trade.

“We’ve seen the market see-saw back and forth, with whatever Russia said (influencing) the way the market moved,” said market analyst Bryan Strommen of Progressive Ag at Fargo, N.D.

Recent weakness in the Russian rouble has encouraged a nearby increase in wheat sales from the country, he said. However, with ongoing tensions between Russia and Ukraine, there are also ideas that any increased business now was to compensate for looming restrictions on exports.

Some Russian officials have indicated it was “business as usual” as far as wheat exports were concerned, while there were other reports out of the country hinting at possible measures to prop up domestic supplies, while slowing exports.

On Monday, the pendulum of opinion was weighted to the side expecting Russia to limit wheat exports, which would lead to increased demand for North American supplies. [Related story]

As a result, wheat futures in Chicago hit their highest levels in over five months, with the March contract closing at US$6.19 per bushel.

In addition to the uncertain Russian export policy, North American traders are also following weather reports out of the country closely, as cold temperatures could harm the winter wheat crop, according to Strommen.

U.S. winter conditions are also a factor, although Strommen said the North American weather would be more important in the spring.

Domestic U.S. stocks are more than adequate for the time being, which may limit the upside potential in wheat, he added.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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