Grain futures edge lower as Ukraine exports seen undisrupted

Corn and wheat fell marked significant declines on Monday as exports from one of their biggest exporters, Ukraine, seemed to be unaffected by the growing tension between Kiev and Moscow following Sundays referendum in Crimea. Soybeans fell as well.

On the Chicago Board of Trade, wheat futures for May delivery fell by 1.49% to $6.770 per bushel by 14:10 GMT. Prices shifted in a daily range between days high and low of $6.942 and $6.716 a bushel. The contract rose by 2% on Friday and settled the week 5% higher.

Meanwhile, corn futures for settlement in the same month fell by 1.13% to $4.804 a bushel, having varied in a daily range between $4.764 and $4.874. The grain added 0.2% on Friday, trimming its weekly decline to 0.5%.

Prices slid amid easing concerns that the tension between Russia and Ukraine will have a significant impact over Ukraines grain exports. The country is the worlds sixth biggest wheat exporter after the US, EU, Canada, Australia and Russia, and third-largest exporter of corn. According to data by the European Commission, Ukraine is the European Unions biggest supplier of wheat, corn and rapeseed.

The US and European Union warned Moscow not to annex Crimea after yesterday’s referendum, according to which 97% percent of voters backed the pro-Russian local government’s decision to separate from Ukraine and join Russia. While the United States, European Union and the Ukrainian government deemed the referendum illegal, Russia said it was in consonance with international law.

President Barack Obama authorized Treasury Secretary Jacob J. Lew to impose financial sanctions which may include freezing assets or prohibiting American companies or individuals from doing business with people or entities who threaten Ukraine’s security. European Union foreign ministers were meeting today in Brussels to discuss measures including assets freezes and travel bans.

Nevertheless, according to Paris-based farm adviser Agritel, Ukraine shipped close to 700 000 tons of corn last week. A feed mill in southern China, the worlds second biggest consumer, bought 50 000 tons of Ukrainian corn, a purchasing manager at the mill said, cited by Bloomberg.

Meanwhile, CBOT wheat futures are headed for their biggest quarterly advance since the the three months through September 2012. According to data by the U.S. Commodity Futures Trading Commission hedge funds that were betting on lower prices since November turned bullish for the first time last week.

Nigel Prentis, the head of consultancy at Hartland Shipping Services Ltd. in London, said for Bloomberg on March 14th: “The referendum in Crimea shouldn’t have any impact at all. Russia needs to export its gas, and Europe needs to buy it. Ukraine needs to export wheat. These trades will continue.”

Global record wheat and and corn output however will keep prices pressured. According to estimates by the U.S. Department of Agriculture, worldwide wheat production in the year ending in June will jump by 8.6% to 712.7 million tons, while corn output will surge 12% to 967.5 million tons.

Elsewhere on the market, soybeans futures for delivery in May fell by 0.22% to $13.854 a bushel. Prices held in a daily range between $13.754 and $13.900 a bushel. The oilseed lost 0.6% on Friday and settled last week 4.8% lower.