Wheat price is in the green for the third consecutive session. The market is reacting to the positive news regarding the release of a Ukrainian grain shipment. Nonetheless, a weakening US dollar continues to offer some support to the commodity.
Ukraine corn shipment
One of the bearish drivers of wheat price is the deal between Russia and Ukraine regarding grain exports through the Black Sea. The departure of a grain shipment from Ukraine’s Odesa port is a major test on the effectiveness of the Russia-Ukraine deal meant to ease the soaring global food prices.
On Monday, Razoni, a merchant vessel under the flag of Sierra Leone, left the Black Sea port transporting 26,000 tonnes of corn from Ukraine. The ship is expected to reach Turkey on Tuesday before the product is dispatched to other parts of the world. Indeed, this is the first vessel to leave the port since late February when Russia invaded Ukraine.
As a reaction to the positive news, corn price is hovering around the psychologically crucial level of $6.00 per bushel, which had been a steady support zone for the agricultural commodity since late January.
Notably, the decline is also observable in wheat price; seeing that Ukraine is a major producer of the two crops. In particular, it is the fifth largest exporter of wheat worldwide. As of now, there are 16 other vessels trapped at Odesa and other nearby ports. However, this is just a tiny portion of the over 22 million tonnes of corn, wheat, and other Ukrainian grains ready for export.
That the market is cautiously optimistic explains why wheat price has reacted rather subtly to the news in question. Investors are now keen on whether the deal will be implemented; an aspect that could give the bears an opportunity to push the CBOT wheat futures to January’s low of $7.34 per bushel.
Besides, the weakening of the US dollar has given wheat price some support despite the recorded losses. As is the case with other commodities, the agricultural asset tends to move inversely to the value of the greenback. The recorded decline in the dollar index has attracted some more foreign buyers who found the asset expensive a few weeks ago.
Wheat price technical analysis
Seeing that the US dollar may have curbed losses based on its status as a safe haven, $8.41 may remain a steady resistance zone for wheat price in the short term. If more ships are released through the Black Sea ports, it may plunge further to around $7.45.