Wheat futures are gearing up to break the longest losing streak since January, as traders returning from the long weekend in the U.S. react to news of progress in negotiations to end the Middle East conflict. This is reported by Bloomberg.
The most liquid wheat futures in Chicago have dropped in price by 1.6%, marking the fourth consecutive session of decline. Soybean and corn futures are also trading in the red.
Grain markets at the Chicago Board of Trade (CBOT) were closed on Monday due to Memorial Day in the US. Thus, the market dynamics on Tuesday reflect the first reactions from traders to the increased optimism regarding a potential deal that could end the conflict. Over the weekend, Trump stated that negotiations with Iran about extending the ceasefire and unblocking the Strait of Hormuz are 'going well'.
The deal to unblock the strait will help restore the flow of fuel and fertilizers that farmers critically depend on, which is likely to lead to an increase in global grain production.
However, the drop in wheat prices was limited after oil prices resumed their upward trend on Tuesday amid reports of new US strikes on Iranian territory, notes Joe Davis, director of commodity markets at Futures International LLC.
US forces struck Iranian missile launch sites and boats attempting to lay mines in the strait, according to a statement from the US Central Command (CENTCOM). Explosions were heard in the area of the Strait of Hormuz, near the coastal cities of Sirik and Jask, reported the semi-official Iranian agency Fars.