(Bloomberg) — Wheat markets remained locked limit down after a key U.S. report forecast bigger ending stockpiles even as the Ukraine war disrupts supplies out of the key Black Sea region.

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Overall impacts from the war on global grain supplies were relatively minimal in the U.S. Department of Agriculture report. World wheat ending stocks were raised slightly, thanks to a bigger Australian crop. This may speak to relatively muted market reaction, with wheat unmoved and corn back within its pre-report trading range.

Benchmark wheat futures in Chicago were down by the exchange limit, or 6.6%, to $12.015 a bushel, after soaring to a multiyear high the prior day. Prices are still up more than 50% since the start of the year, a tremendous gain. Meanwhile, corn futures fell 2.8% to $7.3225 a bushel, and soybeans also fell.

Wheat export estimates from Russia were lowered by 3 million tons to 32 million, while Ukraine wheat exports were cut by 4 million tons. That’s being offset by bigger shipments from Australia and India. The USDA’s outlook for world wheat supplies surpassed all pre-report estimates.

In other commodities, global soybean trade was slashed by 6.4 million tons to 158.6 million as drought in South America continues to parch exports, though this was offset partly by higher U.S. exports.

Russia signaled on Tuesday that it plans to restrict trade of some raw materials, though didn’t specify which ones. Its prime minister warns that the country should prioritize its own wheat supplies in order to secure bread for its people.

Meanwhile, Ukraine is open to discussing Russia’s demand of neutrality as long as it’s given security guarantees, though it won’t surrender a “single inch” of territory, a top foreign policy aide to President Volodymyr Zelenskiy said.

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Russia’s stance is adding to a spate of protectionism from Asia to Europe in the wake of the invasion of Ukraine, which could further weigh on international supplies. Moldova, Hungary and Serbia have all banned some grain exports, and Indonesia is tightening controls over edible oil shipments. Ukraine itself is also prohibiting some exports to ensure food supplies, the Associated Press reported.

“Huge speculative interest has flowed into wheat that may have pushed futures past reasonable levels,” CHS Hedging said. “The export market is difficult to define with many countries baning exports and tenders being canceled.”

Ukraine and Russia typically provide a quarter of global wheat exports and large volumes of corn, barley and vegetable oil. Some grain and sunflower oil cargoes are now moving from the Azov Sea, Interfax reported.


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