Wheat rallies to 3-month high as Russia’s attacks on Ukraine raise risks to Black Sea exports

Russian President Vladimir Putin said his country’s barrage of attacks across Ukraine were made in retaliation to Ukraine’s attack on a bridge to Crimea and other attacks, which Russia described as “terrorist” actions, the Associated Press reported Monday.

“Uncertainty about the future availability of existing Russian and Ukrainian wheat supplies is driving prices right now, and headlines are feeding the uncertainty,” said Sal Gilbertie, president and chief investment officer at Teucrium Trading.

“Wheat is still in a wartime market; volatility based upon headlines is to be expected from this point onward,” he said.

In Monday dealings, the most-active December wheat futures contract WZ22, -3.20% rose 57 3/4 cents, or 6.6%, to settle at $9.38 a bushel in Chicago. Prices marked their highest settlement since June 23, according to Dow Jones Market Data.

Scoville said the grain export deal for Ukraine “might come to an end soon enough and if things get out of control, we could lose access to the Black Sea. We will know soon!”

On Saturday, however, an explosion damaged Russia’s Kerch Strait Bridge, which connects Russia to occupied Crimea and has served as a conduit for Russia troops in southeast Ukraine.

Traders have taken notice following damage to the bridge, as well as “Russia escalating its bombing of civilian centers, energy plants, and the capital city of Kyiv,” said Darin Newsom, president of Darin Newsom Analysis.

Fundamentally, there are a few key issues, including whether or not Ukraine will get any of its winter wheat planted this fall, he told MarketWatch. “It’s starting to look like that answer is no.”

Added to that, “Australia has seen heavy rainfall and flooding over parts of New South Wales, including some wheat growing areas,” said Newsom. “This could lower what was expected to be near record production potential.”

Corn and soybean futures also ended higher, with December corn CZ22, -0.54% up 15 cents, or 2.2%, at $6.98 1/4 a bushel, the highest since June 21, and November soybeans SX22, 0.22% ending at $13.74 a bushel, up 7 cents, or 0.5%.

The situation in Ukraine is “likely playing a role in the corn market” on Monday, said Newsom.

In the U.S., “newly harvested bushels that haven’t already been sold are likely being locked away in private storage until next spring,” he said.

“China is also reportedly in the market for more corn in 2023, and the U.S. is the world’s largest exporter, said Newsom. “This sets the stage for a similar situation to what we saw last year when competition for U.S. cash bushels spiked the market into the late spring.”

The U.S. Department of Agriculture will release its monthly World Agricultural Supply and Demand Estimates on Wednesday.

Wheat, corn and soybeans are finding support from ideas that the USDA report Wednesday “will show less production and ending stocks, and be bullish” for prices, said The Price Futures Group’s Scoville. “I can think that way on corn, but harder to think that for beans — but we will know soon enough.”