Iran-Israel military strikes reinject geopolitics into grain markets
• Brent crude soars 5% on Iran-Israel strikes, before retreating
• Rapeseed, soyoil retain support in late deals
• Return of geopolitics up agenda counters harvest pressure
• European wheat prices ease nonetheless, as currencies recover
Wheat markets stabilised as the, temporary, renewal of hostilities between Iran and Israel reminded markets of the commodity supply threats posed by Middle East tensions, and encouraged a rethink among funds.
Brent crude futures soared 5% at their intraday high on news of Iran and Israel trading military strikes, threatening the region’s delicate ceasefire.
While prices retreated in later deals, after Iran and Israel halted hostilities, Brent crude remained up 1.6%, at $94.56/Bbl.
The headway was reflected in support for prices of rapeseed and soyoil, which are largely used in making biodiesel.
Paris rapeseed futures for August-26 stood 0.4% in late trading, although remained hemmed in by resistance at their 20-day moving average. Winnipeg canola for July-26 added 0.7%.
In Chicago, soyoil futures for July-26 added 0.3% in late morning deals, before encountering resistance at the $0.75/lb mark.
Wheat markets stabilised, as the return of geopolitics up the agenda countered the dominance in market thinking of the expanding northern hemisphere harvest, and the seasonal pressure on prices that brings.
Technical considerations, and factors such as overselling indicators on European contracts, helped stabilise markets too, and foster a rethink among funds which have in both the US and Paris turned to selling wheat.
Managed money in the week to 2 June was a net seller of 34.5K contracts of Chicago soft red winter wheat futures, the biggest selldown since December 2017.
Forecasts for wet weather in the Midwest and eastern Plains, which would slow US harvesting, added support too.
Soft red winter wheat futures for July-26 added 1.2% in Chicago, aiming at what would be their first winning session of this month.
The performance, this time, outpaced European futures, which looked to be ending choppy sessions with small losses, reflecting a recovery in the euro and sterling from losses on Friday against a dollar supported by strong US employment data.
Paris milling wheat futures for September-26 and London feed wheat for November-26 shed 0.4% in late trading.
Paris corn also reversed some of its outperformance, dipping by 0.5% for August-26 delivery, while the Chicago July-26 corn lot added 0.5%.
Weekly data on US corn shipments eased some recent unease over US corn export prospects, coming in at 1.91Mt, a little ahead of the range of market expectations of 1.20-1.90Mt.
