Wheat prices hit a two-year high amid strikes in the Black Sea
Kyiv • UNN
Wheat futures reached a two-year high, but the gains were offset by weak U.S. export data. Russian strikes on Ukrainian ports have reduced a third of grain export capacity.
Wheat prices fluctuate after hitting a two-year high, as traders weigh ongoing strikes by Ukraine and Russia in the Black Sea and weak U.S. export data, Bloomberg reports, writes UNN.
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Wheat futures surged as much as 3.1%, reaching the highest level since late May 2024, before the gains were erased after the U.S. Department of Agriculture showed weekly U.S. wheat exports of 235,000 tons. That is the lowest since May and below analyst expectations surveyed by Bloomberg. American wheat remains more expensive than European supplies.
"Weak export sales data just before the morning pause impacted futures," said Arlan Suderman, chief commodities economist at StoneX, in a note.
Hightower Report analyst Randy Place said some traders may also be squaring their positions ahead of the weekend.
"It got a little aggressive this week, and they are just locking in some profit," Place said, adding that "Ukrainian and Russian supplies are the main thing" affecting wheat.
"While the focus seems to have been on wheat, there is potential for Black Sea supply disruptions to cause broader food price inflation. That risk will increase if disruptions also spread to fertilizers," said Mike Verdin, senior markets consultant at CRM AgriCommodities.
As Financial Times notes, Ukraine is struggling to transport grain across the Black Sea as Moscow intensifies strikes on commercial vessels. Russian drone attacks on the port of Odesa, Ukraine's largest seaport, have reduced storage capacity by a third, according to maritime security firm Ambrey, while shipowners are refusing to send vessels to the area for fear of being attacked. Some traders have suspended purchases in Odesa, according to analysts.
Ukraine has already lost about a third of its grain export capacity through its Black Sea ports due to intensified Russian strikes, Reuters reports, citing the Ukrainian Agrarian Council.
On Thursday, Ukraine's port authority said 11 people, including port workers and foreign sailors, have been killed in dozens of Russian attacks on ports and vessels over the past two weeks.
As a result, according to grain analyst from Dnipro Masha Belikova, domestic purchase prices at Ukrainian ports have "disappeared," and shipowners are no longer providing freight quotes.
Russia is also seeing a decline in seaborne export volumes, at least partly due to shipping safety risks in the Sea of Azov following Ukrainian strikes. Analysts have cut their forecast for Russian wheat exports in July by 20 percent, Russian media report, due to strikes, a late harvest, and Russia's fuel crisis.
The most active wheat futures contract in Chicago hit a two-year high on Thursday, soaring to $6.95 per bushel, while Paris milling wheat prices reached a 17-month high.
"The market is beginning to realize that this is not a typical short-term Black Sea rally that usually resolves quickly. But that this could have more serious consequences, meaning export forecasts for both Russia and Ukraine must be significantly cut going forward, which in turn will make global grain and wheat supplies less stable," said Andrey Sizov, managing director of grain consultancy SovEcon.
The escalation comes as global grain supply prospects have begun to deteriorate after a period of relatively abundant harvests, and the war in Iran has raised the cost of fuel, fertilizers, and shipping.
Some vessels have stopped outside Ukrainian waters to reassess the risk of attacks by Russian drones and missiles, while insurance premiums have surged, according to Pavlo Sosnovsky, an analyst at the Ukrainian company International Seaborne Market (ISM). "Several insurers have completely suspended war risk coverage for voyages to Ukrainian ports," he said.
In Russia, war risk premiums are also rising sharply, with some providers refusing to offer any "war risk" coverage for vessels in the region, Russian media report.
"Grain trade through the Sea of Azov and the Kerch Strait has virtually stopped," reads a note from AgResource Co, cited by Bloomberg. "Black Sea traders fear that attacks will intensify and continue, as both sides seek leverage to win the war."
The situation resembles a similar supply shock at the start of the war in 2022, when Ukrainian ports closed and millions of tons of grain were blocked.
Nevertheless, "the current market reaction is likely to be more limited," said Vitor Pistoia, senior grains and oilseeds analyst at Rabobank. Although both episodes occurred during a period of tight global supplies, the timing is different now.
"Back in 2022, the war escalated ahead of the spring planting and growing season in the Northern Hemisphere, so the market priced in the risk of lower production as well as export disruptions," he said. "In 2026, the focus is on exports."