Wheat Slumps as Big Crops Let Traders Shrug Off Ukraine Angst

Wheat Slumps as Big Crops Let Traders Shrug Off Ukraine Angst
A bundle of harvested wheat on a farm during harvest in Izbat Makina, Egypt, on Thursday, April 27, 2023. Egypt was hard hit by a surge in wheat prices in the immediate wake of Russia’s invasion of Ukraine, sparking a push to pursue new origins.

Wheat fell more than 4% as traders shrugged off concerns about Ukraine’s exports and escalating tensions in the Black Sea amid ample global supplies.

The market is taking a breather after surging about 11% in the previous three sessions after both Ukraine and Russia warned that ships headed to each other’s ports could be considered military targets. The tensions increased concerns that exports would be cut off from the region, considered the breadbasket of the world. Ukraine is the third-largest global exporter of corn and the sixth-largest wheat shipper.

Prices slid on Friday as traders reconsidered the threats to global food supplies. The world still has a large buffer of wheat stockpiles. Ukraine can also turn to other avenues for its grain exports, such as trains and barges, to move away from its reliance on deep-sea ports such as Odesa and Chornomorsk.

The move lower comes at the end of a volatile week that saw the Kremlin terminate the Black Sea grain deal that had kept cargoes of staple crops flowing through the corridor, and then attack Ukraine’s agricultural facilities.

Wheat Drops as Traders Assess Grain Corridor Continuation | Prices dropped after the rally this week as negoatiations continue

Ukraine is trying to restart trade through the corridor, though there’s doubt over whether the goal is realistic. Ukrainian President Volodymyr Zelenskiy instructed his top military commanders on Friday to prepare “actions” that could allow the grain deal to continue functioning. He also told the foreign ministry to prepare “analogous diplomatic steps.” The statement on Zelenskiy’s Telegram didn’t elaborate on what the measures may be.

Senior officials from Turkey, which brokered the deal with the United Nations, said grain exports from Ukrainian ports are unlikely and that Turkey wouldn’t be involved in any shipment as Russia has threatened it may target the vessel.

Russia, the No. 1 wheat shipper, continues to export its robust supplies.

“We have to watch very closely the pace of Russian exports as well,” said Ben Buckner, chief grains analyst for AgResource Co.

‘Making it Difficult’

Russia is trying to “make it difficult” for Ukraine to export grain via the Danube River, Ukrainian Agriculture Minister Mykola Solskyi told Bloomberg TV in an interview. “Nobody knows what they can do today or tomorrow but it’s not the reason to stop exports for us.”

Meanwhile, Russia’s Deputy Foreign Minister Sergey Vershinin said the country may carry out inquiries or inspections to determine what ships are carrying in the Black Sea. While his remarks appeared softer than prior Russian comments that flag states permitting their vessels to go to Ukraine would be considered as supporting Kyiv, the situation is still creating uncertainty for commodity shippers.

Wheat is still poised for a weekly gain of more than 5%.

On Friday, another Russian missile attack damaged “important infrastructure” in the Bilhorod-Dnistrovskyi area in Odesa, according to the regional administration. Russian missiles had hit a grain depot in Odesa overnight, causing a fire and damaging farm equipment, the administration said.

The recent rise in grain prices could again stoke food-commodity costs, which had moderated since the outbreak of the war last year.

Global Food Costs at Risk of Climbing Again | Index hit record high after Russia's invasion of Ukraine

“Markets have reacted violently this week from the geopolitics following Russia’s withdrawal from the Black Sea Grain Initiative, and continued weather concerns across much of the Northern Hemisphere,” ADM Agriculture Ltd. said in a note. “The hype up in military action will also cause ship owners and insurers to be less confident in sending ships into what is now a ‘war zone’ environment.”

The flaring of Black Sea tensions adds to other risks in global grain markets. Heat is threatening corn crops in southern Europe. And drier conditions are ahead for corn and soy crops in the US Midwest and Delta next week, Maxar said in a report. India added to the food supply shocks on Thursday, saying it will ban some rice exports.

  • Wheat futures for September delivery fell 3.9% to $6.985 a bushel 10:59 a.m. in Chicago, after sliding as much as 4.3%
  • Corn and soybeans also slid, but both crops are still headed for weekly advances


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