Wheat and corn prices have dramatically dropped around 30-40% from its highest levels this year, hitting even below the prices before the onset of the Russia-Ukraine war.
But recent developments in the unrest within the region still prove to be affecting the stability of the crop prices.
Wheat futures in Chicago Board of Trade soared around 4.6% on Monday after Russia launched a missile strike on the Ukrainian port of Odesa. This offsets the nearly 6% drop in prices days prior following the brokered deal between the two warring countries to reopen three Ukrainian Black Sea ports (Odesa, Chornomorsk, and Pivdennyi) for grain exports.
Source: Financial Times
“A restart of Ukrainian exports will not only need a safe shipping channel, but also safe ports. The Russians have created doubt about the safety of ports hardly before the ink was dry on the shipping agreement. Doubt is there again,” a European trader said.
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The deal inked among Russia, Ukraine, the United Nations, and Turkey momentarily eased the tension of a potential food shortage crisis since Ukraine’s seaports have been closed when the war started. The agreement is valid for 120 days with target monthly exports of 5 million metric tonnes–aiming to ensure a freer flow of the food commodities among the world’s largest wheat-exporting nations.
“The Russians have created doubt about the safety of ports hardly before the ink was dry on the shipping agreement,” another European trader added.
The Kremlin said, however, that the missile strike on the Odesa port wouldn’t affect the deal’s objective to resume grain exports. Kyiv clarfied as well that the missile attack did not hit the grain storage at the said port.
While the deal has been signed, the trade volume isn’t expected to be back to its normal levels immediately as concerns about security still loom over wheat exporters and shippers, especially exacerbated by the recent missile strike on the port.
“The willingness of ship owners to come with their ships to our ports will be the crucial factor to recover export volumes from Ukraine,” said Roman Slaston, director general of the Ukrainian Agribusiness Club. “[Farmers] have some cautious optimism about this deal, but they also understand that any time it might stop again.”
Information for this briefing was found via Reuters and sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
