Chicago wheat extended its rally to a three-year high, as concerns grow that the war between Russia and Ukraine could escalate and further disrupt supplies from one of the world’s most important breadbaskets.
The conflict has damaged ports and grain terminals, significantly curbing shipments from a top exporting region. Russia is now preparing to intensify attacks on Ukraine, including infrastructure targets, after concluding that negotiations for a peace deal have reached a dead end, according to people close to the Kremlin.
Wheat’s rally marks a sharp shift in the global market for the grain, where abundant supplies had kept prices subdued. Russia and Ukraine account for more than a quarter of global exports, as well as large amounts of barley, corn and sunflower oil, raising the prospect of another bout of food inflation for consumers already struggling with higher energy and transport costs because of the war in the Middle East.
The market is very concerned about logistical constraints if the conflict escalates, said Chris Nikolaou, general manager of Advantage Grain. “If we don’t get a resolution in the Black Sea, and an improvement in shipping access without threat to their security, the rally will continue,” he said.
Ukraine is already facing a drop of more than half in its agricultural exports this season from previous estimates, according to its agriculture ministry. Russia’s wheat shipments, meanwhile, are expected to fall by more than 50% in August from a year earlier.
Chicago wheat rose as much as 2.6% to its highest since July 2023, after jumping 6.4% in the previous session. Prices have surged 19% this month due to the Black Sea disruptions. Corn edged lower after rising 2.5% on Wednesday.
The stakes extend well beyond futures markets. Russia and Ukraine are key suppliers to the Middle East, Africa and Asia, with many consumers reliant on cheaper grain from the region at this time of the year. Importers are now scrambling to secure more expensive supplies from further afield, including Australia and Argentina, which would increase costs and push up prices.
“Russia and Ukraine are generally low-cost suppliers, but now that a large percentage of their supply is unavailable, consumers are in a tougher spot,” said Nikolaou.
This article was generated from an automated news agency feed without modifications to text.
