Wheat Heads for Longest Rally Since April on War, Weather Risks

A combine harvester operates on a field during a durum wheat harvest on a farm near Zehner, Saskatchewan, Canada, on Thursday, Sept. 5, 2024. Canadian 2024-25 wheat production is seen rising to 33.8m tons from 32m tons last season, according to a Bloomberg survey of six analysts. Photographer: Heywood Yu/Bloomberg Photo by Heywood Yu /Bloomberg

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(Bloomberg) — Chicago wheat futures headed for the longest rally since April as Black Sea supply risks and weather uncertainties support prices.

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Russian forces launched a missile and drone attack across Ukraine on Tuesday, killing civilians and damaging energy and port facilities in the Odesa region on the Black Sea, according to Ukrainian officials. 

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That adds to a recent streak of attacks that have damaged infrastructure in both countries, which are major exporters of grains and edible oils. The strikes threaten to disrupt supplies from the region.

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“Ukraine is reporting that Russian attacks on infrastructure and ports have slowed grain exports during December,” AgResource Co. said in a note.

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Wheat prices were up as much as 1.5%, rising for their fifth straight session and touching the highest price in over a week.

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Meanwhile, dryness is also building in US wheat-growing regions, adding support for prices. The US Department of Agriculture in a Tuesday report said dry weather is accompanying record-setting warmth across the central and southern Plains.

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“Record warm temperatures across the southern Plains could be detrimental if cold air moves back into the area in January as some forecasters are warning,” the Hightower Report said in a note.

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In other markets, the most active raw sugar contract rose as much as 0.92% to 15.34 cents per pound in New York — the highest price in two months. 

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That’s as speculative traders became less bearish in the market in the week ending Dec. 16, according to data released Tuesday from the Commodity Futures Trading Commission, while money managers also boosted net bullish bets in the London white sugar market to the highest in 11 weeks. 

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Speculators appear to be covering positions again by liquidating bullish bets, rather than new selling, further reducing the overall net-short position, said Mike McDougall, an analyst at McDougall Global View.

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Still, raw sugar futures are down nearly 21% this year, on track for the biggest yearly loss since 2018.

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The markets will be closed Thursday for the Christmas holiday. 

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—With assistance from Eko Listiyorini and Erin Ailworth.

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