GRAINS-Wheat reaches 2-month high on Ukraine worries; corn firm, soy eases

(Updates with closing U.S. prices)

By Julie Ingwersen

CHICAGO, Sept 22 (Reuters) – U.S. wheat futures set
fresh two-month highs on Thursday, buoyed by risks of a
deepening conflict in Ukraine and dry weather in crop areas of
Argentina and the U.S. Plains, traders said.

Commodity funds hold a net short position in Chicago Board
of Trade wheat futures, leaving the market prone to bouts of
short-covering.

CBOT December wheat settled up 7 cents at $9.10-3/4
per bushel after reaching $9.22-1/2, its highest since July 11.

Corn futures followed wheat higher while soybeans drifted
lower. CBOT December corn ended up 2-3/4 cents at
$6.88-1/4 a bushel and November soybeans finished down
4-1/4 cents at $14.57 a bushel.

Wheat futures shrugged off pressure from disappointing
weekly U.S. export sales and an increased 2022/23 global wheat
production forecast from the International Grains Council.

Brokers seemed focused instead on fears of further
disruptions to Black Sea grain trade that has been partially
re-established by a shipping corridor from Ukraine. President
Vladimir Putin on Wednesday ordered a Russian mobilisation to
fight in Ukraine and hinted he was prepared to use nuclear
weapons.

“Mostly it’s just Russia and Ukraine, and what is happening
over there,” Jack Scoville, analyst with the Price Futures Group
in Chicago, said of the strength in CBOT wheat.

Also bullish, Argentina’s Rosario grains exchange cut its
production forecasts for wheat and corn crops on Wednesday,
reflecting the impact of a prolonged drought.

Dry conditions are gripping the southern U.S. Plains, where
farmers are planting the 2023 winter wheat crop. The weekly U.S.
Drought Monitor report showed “extreme drought” conditions in
53% of Kansas, the top U.S. winter wheat state, up from 42% a
week earlier.

“It is still dry out in the Plains, even though there are a
few showers around. So the new crop isn’t going in with any
benefit,” Scoville said.

Trade in corn and soybean futures was subdued as brokers
awaited results from the U.S. harvest of both crops, which is
just beginning in the Midwest crop belt.

Macroeconomic worries hung over the markets a day after the
U.S. central bank hiked rates by 75 basis points for a third
time, as expected, and raised its rate target to its highest
since 2008.

“The Fed is effectively acknowledging that a recession is
coming, but inflation will not fall quickly and there will be a
lot of pain,” ING economists said in a note.
(Additional reporting by Gus Trompiz in Paris and Enrico Dela
Cruz in Manila; Editing by Sherry Jacob-Phillips; Krishna
Chandra Eluri, Andrea Ricci and Grant McCool)
((Julie.ingwersen@thomsonreuters.com; 1-313-484-5283; Reuters
Messaging: julie.ingwersen.thomsonreuters.com@reuters.net))

Keywords: GLOBAL GRAINS/ (UPDATE 3)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.