Markets engaged in panic buying as the conflict between Ukraine and Russia escalated, a commodity strategist said
By Diego Flammini
Staff Writer
Farms.com
Commodity prices were lower Friday after prices rose on Thursday.
May soft red winter wheat futures, for example, reached $9.32 per bushel on the Chicago Board of Trade Thursday. And May futures of hard red winter wheat hit $9.68 per bushel as the conflict between Ukraine and Russia escalated.
“I think initially there was some panic buying when Russia finally invaded Ukraine,” said Moe Agostino, chief commodity strategist with Farms.com Risk Management. “Pre-war we were worried about ports getting shut down and the world having to look elsewhere to wheat and corn to feed their people.”
But on Friday, those prices came down and negated any previous gains.
“Yesterday wheat prices were up by 50 cents and were down by 65 cents on Friday,” he said. “So really we haven’t gained anything and are back at square one.”
Soybean prices were up on Thursday too.
July soybean futures hit $17.41 per bushel on Thursday and on Friday are at $15.73 per bushel.
Producers who were unable to capitalize on the brief gains shouldn’t be discouraged, Agostino said.
“Unless you were trading stocks in the 1930s, basically none of us have any experience trading during a war,” he said. “The only way you took advantage of yesterday is if you got lucky. The fundamentals on the grain side haven’t changed, and we need to remember that.”
Multiple countries have placed sanctions on Russia in response to its war with Ukraine.
The U.S., for example, “severed the connection to the U.S. financial system for Russia’s largest financial institution, Sberbank”.
No U.S. sanctions have affected Russia’s energy sectors as of yet.
This sets the stage for life to become more expensive for farmers, Agostino said.
“If NATO and the west put sanctions on Russian oil, and prices go up to $120 per barrel or higher, then yes, the average consumer will see that reflected at the gas and diesel pumps,” he said. “Or, if Putin decides to retaliate and withhold oil, that would cause disruption in the supply chain and lead to higher prices as well.”