Russia is achieving its goal by striking Ukrainian ports

On the night of July 24, the Russian Federation attacked the Danube port of Reni with 15 Iranian drones, as a result of which three warehouses with grain were damaged, fires broke out, and the reception and shipment of grain was stopped. Exchanges reacted to this with a price jump of 7-8.6%. According to preliminary data, several Romanian barges were also damaged, so shipowners partially transferred their fleet to the Romanian port of Galati, located 26 km from Reni. An escalation of the war at sea will reduce the number of ships venturing into the region and raise freight costs amid heightened risks.

Currently, 30 ships have accumulated in the queue to enter the Danube, so due to a supply failure, purchase prices in Ukraine may decrease.

Ukraine can respond to a new phase of the war with attacks on ports and shipping with a mirror attack on Russian ports, which will lead to an increase in world grain prices.

Similar to last year’s gas blackmail, the Russian Federation is now threatening the world with a food crisis and is provoking an increase in world wheat prices in order to sell its own harvest at the most profitable price.

Yesterday, September futures rose in price:

• by 8.6% to $278.3/t – for soft winter SRW wheat in Chicago,
• by 6.8% to $337.5/t – for hard winter HRW wheat in Kansas City,
• by 5.5% to $343.9/t – for hard spring HRS-wheat in Minneapolis,
• by 2.6% to $243.25/t – for Black Sea wheat in Chicago,
• by 7% to €264.75/t or $293.9/t – for wheat on the Paris Euronext.

As of July 24, Ukraine exported 563,000 tons of wheat in the 2023/24 financial year, which is significantly more than 325,000 tons on this date last year. But it is worth reminding that the grain corridor started working on July 25, 2022, which significantly increased exports.

In the US, as of July 23, winter wheat was harvested on 68% of the area (77% last year and 87% on average over 5 years), and the number of spring wheat crops in good or excellent condition for the week decreased from 51% to 49%.

The export of wheat from the USA in the period July 14-20 decreased in comparison with the previous week by 24% to 358.8 thousand tons, and in general in the season amounted to 2.153 million tons compared to 2.592 million tons last year.

The US State Department warned that after withdrawing from the grain agreement, strikes on Odesa and the Danube ports, the Russian Federation is now preparing a provocation under a foreign flag in the Black Sea. An attack by one’s own or foreign civilian vessels in the international waters of the Black Sea will lead to a further increase in wheat prices.