Wheat Sinks to Pre-War Levels as Recession Fears Grow



Kim Chipman and Michael Hirtzer
Fri, July 1, 2022 

(Bloomberg) -- Crop futures sank in the US, with wheat closing the week at levels not seen since before Russia’s invasion of Ukraine, as concern mounts that a global economic slump might hobble demand for farm commodities.

The worry hits as anxiety about possible grain shortages is easing. Two key reports from the US Department of Agriculture on Thursday indicated bigger-than-expected grain supplies.

Even as uncertainty persists over how the ongoing war will impact exports, nervousness is growing that a recession could crimp crop demand. Futures are down from near-record highs, which could help pause the food inflation that escalated earlier this year. In the nearer term, traders on Friday were busy positioning ahead of the three-day holiday weekend in the US.

“Buyers are not to be found right now,” said Arlan Suderman, chief commodities economist at StoneX. “It’s all about trading chart signals and momentum. Nobody wants to step in front of this freight train.”

Read more: War-hit wheat faces moment of truth as harvests arrive

Even soybeans plummeted, despite the USDA estimating smaller acreage than initially expected. The seedings still would be the third-biggest on record if realized.

Most-active benchmark wheat settled down 4.9% to $8.41 a bushel in Chicago, the lowest since Feb. 18, a few days before the invasion upended commodity markets. The futures jumped to an all-time intraday high of $13.635 a bushel in early March, spurring food cost spikes, grain hoarding and widespread fear of severe supply shortages.

Both corn and soybeans ended the trading day at their lowest levels since late January, as did the soybean oil relied on for processing food and making climate-friendly diesel. Soy meal, used to help feed hogs and chickens, plunged 4.1%, the biggest drop in almost a year.