Chicago grains consolidate in Black Sea, recession risks assessed

By Gus Trompiz and Enrico Dela Cruz

PARIS/MANILA, Sept 22 (Reuters) – Chicago wheat eased on Thursday after a two-month high while corn and soybeans were flat as grain markets weighed the risk of a deepening conflict in Ukraine and the threat of rising interest rates triggering an economic slowdown. The Chicago Board of Trade’s (CBOT) top-traded wheat contract was down 0.6% at $8.98 a bushel at 11:15 GMT, after rising slightly earlier in the session.

On Wednesday, the contract had reached its highest level since July 11 after President Vladimir Putin ordered a Russian mobilization to fight in Ukraine and hinted that he was ready to use nuclear weapons. Moscow’s statements, which also included support for referendums on Russian membership in occupied areas of Ukraine, stoked fears of further disruption in the partially restored Black Sea grain trade via a maritime corridor from Ukraine.

However, a new 20-year high for the dollar index and stock market losses, after the US Federal Reserve said it would continue to fight inflation beyond the last rate hike, held back the wheat recovery.

“It’s like with Putin the market is up and with the Fed it’s down,” said one European trader.

The U.S. central bank raised rates by 75 basis points for the third consecutive time, as expected, and raised its rate target to its highest level since 2008.

“The Fed does recognize 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.

However, commodity markets received some support from signs of rising fuel demand in China. CBOT corn was unchanged on the day at $6.85-1/2 a bushel, while CBOT soybeans added 0.2% to $14.63-3/4 a bushel. Corn and soybean markets fell on Wednesday, under pressure from economic concerns and the strength of the dollar. Chicago soybeans were also capped by an increase in Argentine exports following government incentives. The market will receive an update on US grain export sales in weekly data later Thursday.

Prices at 1115 GMT Last Change Pct End Ytd Pct Move 2021 Move CBOT wheat 898.00 -5.75 -0.64 770.75 16.51 CBOT corn 685.50 0.00 0.00 593.25 15.55 CBOT soy 1463.75 2.50 0.17 1339.25 9.30 Paris wheat 345.75 -1.25 -0.36 276.75 24.93 Paris maize 338.25 0.25 0.07 226.00 49.67 Paris Rape 586.75 6.75 1.16 754.00 -22.18 WTI Crude Oil 83.86 0.92 1.11 75.21 11.50 Euro/dlr 0.99 0, 00 0.29 1.1368 -13.21 Most active futures – wheat, corn and soybeans US cents/bushel.

(Reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Krishna Chandra Eluri)

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