Was it Einstein who said every action has an equal but opposite reaction. It appears the laws of physics may also be able to be applied to grain futures markets after last night’s demise of US grain futures.
Wheat futures at Chicago were crushed as the punters took profit. Even an excellent US weekly export sales report couldn’t save the market. After a few days of testing limits, and those limits being adjusted as per trade rules, it was open to big moves and big they were. This is just the 5th time I’ve seen moves of this magnitude in nearby SRWW futures. Last time a negative 80c or greater nose dive happened was back in March 2008.
All three wheat grades in the US saw substantial losses, corn and soybeans were not immune, corn back 35.5c in the March 22 contract and soybeans at Chicago back over 70c on the nearby. This had the usual knock on affect to oilseeds. Winnipeg canola shedding C$60 on the nearby, yep C$60. Paris rapeseed shed E36.50, that’s about AUD$57/t.

The move lower was fundamentally against the news coming out of the Black Sea. The rally had existed on the premise that flow of grain would be affected. Up until yesterday it basically had not been. Ukraine suspended commercial shipping and Russia closed the Azov Sea to commercial shipping. Was this a simple buy the rumour / sell the fact market at Chicago, incredible to think the funds have this much influence if this is the case. There was talk of significant risk premiums to load out of the Black Sea, maybe the fundamental reality that Black Sea grains, thanks to the logistical costs, were untenable anyway. Egypt thought so I guess, cancelling their recent tender request.