The price of wheat on the Chicago exchange continued to rise, reaching its highest level in three years. The increase was driven by concerns over further escalation of Russia’s war against Ukraine and new disruptions to grain exports from the Black Sea region, Bloomberg writes, as reported by UNN.
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Russia and Ukraine are among the key suppliers of grain to the global market. The two countries account for more than a quarter of global wheat exports, as well as significant volumes of barley, corn, and sunflower oil.
The war has already damaged Ukrainian ports and grain terminals, limiting export opportunities. The market now fears that, in the event of a renewed intensification of Russian attacks, the supply situation could deteriorate even further.
Escalation of the war could drive up global food prices
According to Bloomberg, Russia is preparing to intensify strikes on Ukraine, particularly against infrastructure, after the Kremlin concluded that negotiations on a peace agreement had reached an impasse.
The market is very concerned about logistical restrictions in the event of an escalation of the conflict
According to him, if agreements on safe shipping in the Black Sea are not reached, the rise in grain prices could continue.
Ukrainian agricultural exports have already fallen by more than half compared with previous estimates. At the same time, Russian wheat exports in August are expected to be more than 50% lower than last year.
Against this backdrop, the price of Chicago wheat rose by 2.6% after jumping 6.4% the previous day. Since the beginning of August, it has increased by approximately 19%, and its current level is the highest since July 2023.
The rise in grain prices is already extending beyond the futures market. Countries in the Middle East, Africa, and Asia depend heavily on supplies from Russia and Ukraine, which traditionally offer grain at lower prices.