CHICAGO (Realist English). Wheat futures are falling for the fourth consecutive session. Trump’s statements about an “energy truce” between Russia and Ukraine have strengthened expectations of reduced tension in the Black Sea region.
Price dynamics
Chicago wheat futures fell 1.3% during the Asian electronic session on Monday, October 12. After that, they partially recovered the decline.
The day before, on October 10, wheat plunged 3.2%. This occurred after the US Department of Agriculture unexpectedly raised its corn harvest forecast. On October 11, the wheat price dropped below $6.70 per bushel. This is the lowest since August 18.
Key trigger: Trump announced an “energy truce”
US President Donald Trump announced on Sunday, October 11: Russia and Ukraine agreed to immediately introduce an “energy truce.” That is, to stop strikes on each other’s energy infrastructure. The market perceived this as a signal of a possible easing of shipping disruptions in the Black Sea.
Ukrainian President Volodymyr Zelensky responded: the Ukrainian side supports a ceasefire. But it is still “awaiting details.” At the time of publication, the Russian side had not confirmed the truce agreement.
Market reaction
Head of commodity sales at Futures International LLC Joe Davis stated directly: “The energy factor itself is not the main cause. Expectations of a general de-escalation are weighing on the market.”
Russia and Ukraine together account for more than a quarter of global wheat exports. The Black Sea corridor is of key importance for global food supplies.
If the conflict continues to de-escalate, Black Sea exports may recover. The geopolitical premium embedded in the wheat price will continue to shrink. However, the market notes: an energy truce does not automatically protect grain infrastructure or commercial vessels. Export prospects remain uncertain.
Additional pressure: USDA raised corn forecast
In addition to the geopolitical factor, the US Department of Agriculture unexpectedly raised its estimates for corn yields and production in the country. This caused broad selling in the grain market. Corn futures on Friday showed the largest single-day drop in three years. Selling pressure spilled over into wheat.
Davis added: over the next month, pressure from the US harvest campaign will persist. A short-term price rebound is unlikely.
Background: previous diplomatic efforts failed
The current price decline comes after a series of diplomatic attempts. Turkey and the UN had previously promoted talks between Russia and Ukraine on a Black Sea truce. Meetings were planned for early October with mediation by the Swiss Center for Humanitarian Dialogue.
However, Ukrainian Agriculture Minister Vysotsky stated in late September: Russia rejected all proposals for a Black Sea truce. The prospects for an agreement in the near future remain unclear. Russian Foreign Minister Lavrov directly called a return to the framework of the 2022 grain deal “absolutely unacceptable and unrealistic.”
