Wheat prices have soared to two-month highs this week amid fears that Russia’s military operation may jeopardize this year’s planting and harvesting season in Ukraine, several media outlets have reported, citing traders.
March futures on the Chicago Mercantile Exchange closed at over $8.0075 a bushel on Monday, the highest since November 23. Quotes were slightly down on Tuesday but are still up for the year.
Wheat prices initially jumped on Friday, with analysts attributing the surge to Russia’s latest missile strikes in Ukraine. Traders warn that infrastructure damage from the missiles or a potential worsening of the conflict would jeopardize Black Sea shipments, which are already a third below the previous season.
“Wheat has been the leader linked to increased tension in Ukraine, which could slow the Ukrainian exports and the planting for the 2023 crop and it could also lead to increased sanctions against Russia,” Mark Polowy, a senior account executive at Archer Financial Services, told Reuters.
Concerns about the supply of wheat to the global market emerged right after the start of Russia’s military operation in Ukraine just under a year ago. The two countries together are responsible for over a quarter of the global supply of grains. Shipments were halted in mid-2022 due to the conflict and Western sanctions against Russia, but Ukraine was able to resume exports under the UN-brokered Black Sea Grain Initiative. The agreement, which was reached last July between Ukraine, Russia, and Türkiye, allowed shipments of wheat and other agricultural products interrupted by the conflict to be restored.
Under the deal, the UN was also expected to help Russia resume its own grain shipments via the Black Sea, which, although not directly targeted by Western sanctions, have faced problems due to the restrictions. Russia’s ambassador to the UN said earlier this month that Moscow has not been able to export any grain as part of the agreement.
Meanwhile, Russia’s grain crop last year was the largest on record, according to Rosstat, the country’s official statistics agency. The overall grain harvest amounted to 153.8 million tons, a 26.7% increase year-on-year against 2021, with the wheat harvest alone reaching a historic high of 104.4 million tons.