Wheat caught in volatile trade as markets negotiate Iran conflict fallout
• Markets focus on expanding impact of Iran conflict
• Three US jets downed by friendly fire, drone attack on UK base
• Gas prices soar 50% in Europe on Qatar shutdown
• Wheat futures swing significantly
• Rapeseed gains, helped by rising oil, China canola ruling
Wheat price volatility jumped as markets grappled with the fallout from the Iran conflict, which has expanded to include the shutdown of Qatar’s gas industry and the downing of three US fighter jets.
Energy proved the primary focus of market attention as traders negotiated the rapidly developing newsflow stemming from the Middle East, where Israel, while with the US continuing attacks on Iran, expanded its battlefront to include Hizbollah militia targets.
Gas prices soared by nearly 50% in Europe at one stage on news that QatarEnergy, the world’s biggest liquified natural gas (LNG) company, had been forced to halt production following attacks by Iran.
With India relying on Qatar for more than 45% of its LNG supplies, and China on 30%, the shutdown raised the spectre for Europe of increased competition for its substantial gas imports.
Meanwhile, the UK maritime trade operations centre reported that traffic in the Strait of Hormuz, through which 20% of seaborne world oil and LNG supplies pass, had dropped by 80% following attacks to vessels.
Three US fighter jets were reported as having been mistakenly shot down by Kuwaiti air defences, while the UK’s Akrotiri military base on Cyprus on Sunday suffered a drone attack.
Brent crude soared nearly 14% in early trading.
Volatility spread into other markets too, with precious metals finding buyers, while shares slipped.
However, offered some reassurance by comments by US Secretary of Defence Pete Hegseth that the conflict with Iran would not be “endless”, and without evidence of Iran scoring serious blows, markets settled in later trading.
Brent crude stood up a more modest 6.1% in late deals, at $77.30/Bbl, some $5/Bbl below early highs.
Among grains, Chicago wheat futures for May-26, having soared 3.0% on Friday as news emerged late in the session of preparations for attacks, lost nearly all that ground on Monday, trading 2.7% lower in late morning deals.
The contract’s 4.9% swing, peak to trough, in the day so far makes it the most volatile session for a best-traded Chicago wheat lot since June.
However, pressure was more limited on European contracts, which had chalked up more modest headway on Friday, and which were protected somewhat by from pressure on Monday by depreciations of about 1% in both the euro and sterling against a dollar bought as a safe haven currency.
London feed wheat for May-26 settled unchanged, at the end of a session over which it swang by 3% from peak to trough, its most volatile session of the year. At its intraday peak of £172.00/t, the lot touched its 100-day moving average for the first time in four months.
Paris milling wheat for May-26 stood 0.1% lower in late deals, having earlier hit temporarily its 200-day moving average for the first time in nearly a year.
Fundamental news on the day included a purchase by Saudi Arabia’s main state buying agency of 794Kt at a tender announced last week, before the Israel-US attacks on Iran.
Among oilseeds, rapeseed futures for May-26 traded 1.4% higher in late deals, supported by the grain in crude oil prices, and by a ruling by China of a tariff of 5.9% on Canadian canola, well below the punitive rate of 75.8% imposed last year.
Confirmation is expected later this week of Chinese purchases of Canadian canola, which for May-26 delivery gained 1.5% in Winnipeg.
