Wheat prices have not yet reacted to the statement of the Ministry of Defense of Ukraine about the danger of navigation in the Black Sea

Following the Russian Defense Ministry’s announcement that all ships sailing to Ukrainian ports will be considered military targets, the Ukrainian Ministry of Defense has announced a symmetrical position with respect to ships entering Russian ports in the Black Sea.

In a statement yesterday, the Defense Ministry said that starting from 0:00 a.m. on July 21, all ships in the Black Sea heading to Russian or occupied Ukrainian ports will be considered potential carriers of military cargo with all the corresponding risks.

Ukraine has also announced a ban on shipping in the northeastern part of the Black Sea and the Kerch-Yenikal Strait from 05:00 on July 20, 2023 due to the significant danger.

“By threatening civilian ships transporting food from Ukrainian ports, attacking civilian infrastructure of peaceful cities with missiles and drones, deliberately creating a military threat on trade routes, the Kremlin has turned the Black Sea into a dangerous zone, so the Russian authorities must bear responsibility for all risks,” the Ukrainian Defense Ministry said.

The announcement was preceded by three consecutive night attacks on Odesa, where Ukraine’s main deepwater ports are located, and Russia’s official withdrawal from the grain deal.

On Wednesday, Russia announced that all ships in the Black Sea heading to Ukrainian ports will be considered to be carrying military cargo and legitimate targets. This led to a rise in the price of wheat futures, given the possible danger to ships entering the Danube ports.

Amid the statement by the Russian Defense Ministry and the shelling of Ukrainian ports, wheat quotations on Chicago and Paris stock exchanges rose by 8.2% and 8.5%. However, prices hardly reacted to the counter statement by the Ukrainian Defense Ministry, as the market does not believe that Ukraine will attack civilian ships, so such threats will only increase the cost of insurance for ships heading to the ports of both countries.

Yesterday, September futures rose:

• 0.9% to 321,4 $/t – for hard winter HRW wheat in Kansas City,
• by 0.5% to 331.4 $/t – for hard spring HRS wheat in Minneapolis,
• by 0.8% to 255,75 €/t or 284,25 $/t – for wheat on the Paris Euronex.

At the same time, prices for black sea wheat in Chicago fell by 0.2% to 238.5 $/t, and for soft winter SRW wheat in Chicago remained at 267.4 $/t.

Export sales of wheat from the United States for 7-13 July amounted to only 170 thousand tons, and in General in the season – 5.19 million tons, which is 31.6% lower than last year.

Experts IGC lowered its forecast of world wheat production in 2023/24 MG by 2 million tons to 784 million tons due to the reduction of the estimate for Argentina from 19 to 17.5 million tons.

Tags: Ukraine, Russia, prices, wheat, USA, war