03/03/23 Sell the Rumor, Buy the Fact?

Even more than usual right now, the market is sensitive to a constant flow of news headlines that have set up grain prices for regular instances of prices following the pattern of “buy the rumor, sell the fact.” A major example has been the wheat market getting temporarily riled up by developments from the war in the Ukraine and the approaching expiration of the Black Sea export deal, only for wheat prices to deflate quickly after data on U.S. exports continue to show no improvement.   Unless something changes to allow U.S. exports to compete with cheaper Russian wheat, traders will think it is justified to have wheat futures trading below their levels from just before the invasion of Ukraine one year ago. With the prospects of the war only intensifying, it could be a matter of when, not if, that risk premium returns to flip the script for wheat into a “sell the rumor, buy the fact” type of reaction. The immediate risk point remains the possibility of further disruption for the grain export agreement that has mainly facilitated the export of Russia’s record-large wheat crop from last season. The next catalyst could involve the struggle for Ukraine to…