Chicago wheat fluctuates with war and weather fueling volatility

Chicago wheat pulled back on Tuesday as traders try to assess what Ukraine war and dry U.S. weather may mean for global supply of the crucial food staple. 

Most-active futures for benchmark soft red winter wheat, which is used for cookies and cakes, fell as much as 1.5% after climbing more than 5% on Monday. Prices were little changed at mid day. U.S.-traded contracts linked to hard red winter wheat, a staple for making bread flour, and spring grains, used for baking bagels and pizza dough, also swung between gains and losses.

The world is facing uncertain grain stockpiles at a time of record-high food costs. A key focus is whether any significant amount of wheat shipments will be able to move out of war-torn Ukraine. Also stoking worry is dryness in other big grain-growing regions like the U.S., though some areas saw needed precipitation over the last couple days. 

“With so much supply uncertainty regarding Ukraine, and concerns over new crops from China and Europe and the U.S., the market looks to remain volatile,” Hightower Report analysts said in a note.  

While the U.S. Plains sees some beneficial rains, the latest crop ratings remain low after a lengthy dry spell. Parts of the European Union are also turning dry, although yields so far are seen about steady with last year. China also is experiencing weather woes.

In other crops, Chicago corn fell while soybeans rose, though pared earlier gains and dropped below $17 a bushel. Concern is swirling around the oilseed as expected severe shortfalls in Ukraine’s sunflower crop threatens to worsen already tight global supplies of vegetable oils used for food and fuel.