Wheat Prices Jump After Russian Missile Strike Tests Ukraine Deal
Wheat jumped after Russia’s weekend attack on the seaport of Odesa, even as Ukraine indicated it is pushing ahead with a deal to begin shipping millions of tons of grain that has been piling up since the invasion.
“The willingness of ship owners to come with their ships to our ports will be the crucial factor to recover export volumes from Ukraine,” Roman Slaston, director general of the Ukrainian Agribusiness Club, said by telephone. Farmers “have some cautious optimism about this deal, but they also understand that any time it might stop again.”
Chicago wheat futures surged as much as 4.6% and traded 1.4% higher at 10:14 a.m. local time. Prices had slumped almost 6% Friday and closed at the lowest since early February after the deal was signed in Istanbul.
Some analysts remain skeptical of the time frame for exports resuming.
“It is thought to be unlikely that much will move from Ukraine right away as the infrastructure internally and at the ports needs to be rebuilt,” Jack Scoville, an analyst at Price Futures Group Inc. in Chicago, said in a note.
Ukraine said on the weekend that the missiles didn’t hit grain storage at the port. Russia said Monday its missile strike on Odesa targeted a military area and wouldn’t affect plans to resume grain exports from the Black Sea port.
“The attack on Odesa last Saturday is raising doubts about the resumption of the port activity in appropriate conditions,” Agritel said in a note. “The market will inevitably remain very nervous in the event of new bombings or doubts about the concrete implementation of this resumption of export activity.”
Ukraine is moving ahead for now with preparations and its government is under pressure to restart grain exports to support its economy, which has been devastated by the war. The infrastructure ministry said Kyiv is beginning to prepare the Odesa, Chornomorsk and Pivdennyi ports to resume work and published a call for ships willing to take part in grain export caravans.
Once exports resume, traders will be watching for signs of how quickly volumes can pick up. The country normally ranks among the world’s top corn, wheat and vegetable-oil shippers, and millions of tons of grain have been stuck in its borders since Russia’s invasion early this year blocked major ports. The three ports involved have the capacity to ship about three to four million tons of grain a month, according to the director general of the Ukrainian Agribusiness Club.
While a small volume has been rerouted by road, river and rail, major customers have been forced to look elsewhere for supplies, pushing up prices and worsening food insecurity. UN Secretary-General Antonio Guterres said resuming seaborne trade would bridge those gaps and urged the deal to be “fully implemented.”
In Chicago, corn also headed for its first advance in a week and soybeans rose.