Wheat Extends Surge as Russia Threatens Ships Headed to Ukraine
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2023-07-20 14:57
Wheat kept rising — following the biggest daily surge in a decade on Wednesday — as Russian threats

Wheat kept rising — following the biggest daily surge in a decade on Wednesday — as Russian threats against ships sailing to Ukrainian ports escalated a conflict over grain exports from the Black Sea region.

Futures in Chicago rose 1% after advancing almost 9% at one point in the previous session, the biggest increase since 2012. Russia’s Ministry of Defense warned that all vessels in the Black Sea heading to Ukrainian ports would be considered potential carriers of military cargo starting Thursday.

The warning came just days after Russia ended the Black Sea grain deal that kept Ukrainian exports flowing through the corridor. Ukraine’s Black Sea ports are a vital artery for its sales abroad — historically accounting for the bulk of shipments — and the harvest season is now underway. The corridor’s closure could slow the next crop getting to market.

Read More: US Warns of Russian Threat to Civilian Grain Ships in Black Sea

Food inflation fears are mounting again. Grain prices have, until recently, been moderating, due in part to the Black Sea accord. But the costs of many products made from wheat, such as flour and breakfast cereal, have continued to climb. Grain supply risks may raise costs for food manufacturers once again.

Reduced availability of grain from Ukraine means less export availability during the crucial Black Sea harvest period, said Dennis Voznesenski, a senior agriculture analyst at Rabobank Group in Sydney.

“In the long term, it means more grain stockpiled in Ukraine, which leads to lower Ukrainian prices, lower Ukrainian farm margins and lower planting,” he said.

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