Wheat Jumps After Russian Strike Boosts Black Sea Supply Fears

2023-07-27 15:54

Wheat futures climbed as Ukraine said Russia fired two Kalibr cruise missiles from a submarine in the Black

Wheat futures climbed as Ukraine said Russia fired two Kalibr cruise missiles from a submarine in the Black Sea at Odesa region port infrastructure, damaging equipment at a cargo terminal and increasing concerns over Black Sea grain supplies.

Wheat in Chicago rose 2.5% to $7.3825 a bushel by 3:26 p.m. Singapore time. Prices of the food staple are extremely sensitive to news of Russian attacks on Ukrainian ports because of the global importance of crop supplies from the Black Sea region. Russia pulled out of an agreement that allowed Ukraine to ship grain through the Black Sea on July 17, and has since attacked infrastructure at Odesa region ports, as well as on the Danube river.

The attacks and threats by Moscow to target vessels in the Black Sea heading for Ukraine, along with potential tit-for-tat retaliation by Kyiv, have increased supply risks and pushed wheat prices to the highest in five months this week.

Ukraine gave more details of the attacks in a Facebook post late Wednesday. “Only during the past nine days as a result of Russian attacks, 26 objects of port infrastructure and five civilian vessels have been damaged and partially destroyed,” said Infrastructure Minister Oleksandr Kubrakov.

NATO said it’s stepping up surveillance and reconnaissance in the Black Sea region, including with patrol aircraft and drones, as the military alliance condemned Russian attacks on Ukrainian ports and grain storage facilities.

Still, prospects for ample supplies in the northern hemisphere this summer have curbed global price gains. Russia could ship as much as 60 million tons of grain in the new agricultural season, Russian Grain Union President Arkady Zlochevsky said this week, according to Tass, citing a second record harvest.

The latest attack comes as President Vladimir Putin hosts a summit with African leaders intended to show Russia’s growing influence on the continent. Instead, it takes place amid criticism in Africa of the impact on food prices of Russia’s withdrawal from the grain deal and attacks on Ukrainian ports.