Wheat jumps 2 pct as Ukraine tensions rise

April 14th, 2014

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Category: Grains, Oilseeds

(Reuters) – U.S. wheat futures rose as much as 2 percent on Monday as tensions escalated in Ukraine, stoking fears of potential supply disruptions from one of the world’s largest exporters.

Corn climbed more than 0.5 percent in its first daily gain in four sessions on the rising uncertainty in Ukraine, while soybeans also firmed, rebounding slightly from losses of 2 percent in the previous two sessions when Chinese defaults weighed.

Chicago Board of Trade May wheat futures were up 1.63 percent at $6.71 a bushel at 0530 GMT, having earlier hit a session high of $6.73-1/2 a bushel. Wheat closed down 0.3 percent on Friday.

“Tensions in the Ukraine have risen,” said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. “A re-escalation of violence in that Black Sea region will refocus market attention on the potential consequence it could have for either plantings or trade.”

Tensions in the Black Sea region rose after Ukraine gave pro-Russian separatists a Monday morning deadline to disarm or face a “full-scale anti-terrorist operation” by its armed forces, raising the risk of a military confrontation with Moscow.

Ukraine is forecast to export 9.5 million tonnes of wheat in the 2013/14 season, the U.S. Department of Agriculture said last week, having previously pegged sales at 10 million one month earlier.     Wheat prices also drew support from forecasts for further cold weather across the U.S. Plains, adding to concerns over potential crop damage.

Updated weather models expect a cold front to hit key growing regions this week, with the condition of the U.S. winter wheat crop already at a 12-year low.     May corn futures rose 0.6 percent to $5.01-1/2 a bushel, having closed down 0.6 percent on Friday.

The USDA pegged Ukraine corn exports at 19 million tonnes last week, up from its previous estimate of 18.5 million tonnes.

May soybeans futures rose 0.55 percent to $14.71 a bushel, having closed down 1.3 percent in the previous session.

Soybeans have come under sustained pressure in recent sessions after Reuters reported that Chinese importers defaulted on at least 500,000 tonnes of U.S. and Brazilian soybean cargoes worth around $300 million – the biggest in a decade – as buyers struggled to get credit amid losses in processing beans.

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