(Bloomberg) -- Wheat prices surged the most since August, while cocoa slumped below a key psychological level as crop futures markets start off the week with big price fluctuations. 

Futures of the cereal variety used to make crackers and pastries gained as much as 6.1% in Chicago, briefly touching the daily exchange price limit of 40 cents per bushel, amid renewed concerns about the weather in the Black Sea region. Roughly 40% of the wheat crops in Southern Russia and three quarters of Ukraine’s should contend with drought stress over the next 10 days, according to forecaster Commodity Weather Group.

Bumper harvests in Russia have played a crucial role in deflating wheat from the record highs seen in 2022, while also eroding US farmers’ ability to compete overseas. Now, the dimming outlook for Russia’s production this year has traders bracing for tighter global supplies and increased demand for the American cereal, all contributing to higher prices. 

Prices for soybeans and corn also jumped in Chicago, helping propel the Bloomberg Agriculture Subindex to its biggest intraday gain since July.

Cocoa

Meanwhile, cocoa futures fell as much as 7.9% to the lowest since March in New York, before erasing most of the losses. The commodity, which has been declining for three straight days, also dropped below its 100-day moving average price, a signal of market weakness that sometimes exacerbates selling. 

Rains over top growing countries in West Africa are bringing some relief to global traders of the chocolate ingredients after an unprecedented rally sent prices skyrocketing to record highs last month.

Cocoa has also been pressured down by a “dearth of buying,” with chocolate producers opting to stay on the sidelines as they fear prices will continue to fall, according to Judy Ganes, president at J. Ganes Consulting.

“If a market is in freefall, let it keep declining instead of picking bottoms,” Ganes said. 

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