Wheat Prices Jump After Russia Exits Grain Deal; UN Races To Save Agreement
It’s been two days since Russia suspended its participation in the Ukraine grain export deal after a swarm of drones targeted at least one Russian warship from the Black Sea navy. Wheat futures soared Monday as traders eye tightening world supplies following Russia’s exit.
Moscow immediately suspended its compliance with the grain deal, known as the Black Sea Grain Initiative, which was formed and launched in July and ended a five-month Russian blockade of Ukraine’s ports. The United Nations and Turkey brokered the deal, allowing safe passage for cargo ships in and out of Ukraine’s ports to haul farm goods worldwide.
The deal was successful, as Bloomberg data shows Ukrainian exports via the Black Sea ramped after the agreement was signed in late summer.
But what the Russian Defense Ministry describes as a “massive” drone attack on the Black Sea Fleet in the Crimean port city of Sevastopol derailed all hopes of a continuation of the deal as Moscow pulled out.
Charlie Sernatinger, global head of grain futures at ED&F Man Capital Markets Inc. in Chicago, told Bloomberg on Sunday that grain prices are headed higher.
Sernatinger is right. Wheat in Chicago jumped nearly 8% to $8.9325 a bushel Monday morning.
Andrey Sizov, a Russian grains analyst at SovEcon, told WSJ that many funds would have to buy into grain markets Monday to cover their positions.
Corn, soybean oil, and soybean prices were also higher.