Wheat futures soared almost 6% on Monday, while corn climbed over 2%, following Russia’s move to withdraw from the Black Sea grain deal sponsored by the United Nations (UN).
December contract US wheat futures were up nearly 6% to as high as $889 earlier in the session before easing to trade 5.4% higher at $874.30 per bushel.
Chicago Board of Trade’s (CBOT) most active wheat contract also rose 5.7% to $$8.77-¾ per bushel, having touched $8.93 earlier, its highest level since October 14.
Wheat futures reached a record high of $13.64 per bushel in March.
US corn futures for December settlement also gained 2.3% to $695.62 after hitting a two-week high of $698.75 per bushel earlier, while US soybeans futures added 0.4% to $1,405.75.
A Singapore-based trader stated that the prices’ gains were an inflationary move, although further increases would depend on how the situation develops.
Grain Exports at Risk on Russia’s Withdrawal
Russia announced over the weekend pulled out from the UN-brokered Black Sea grain deal on what it described as a major Ukrainian drone attack on its fleet in Crimea.
The move effectively cuts shipments from Ukraine, one of the world’s leading exporters. The agreement has allowed the country to ship over 9 million tons of agricultural goods since its implementation in July, impacting the global market’s overall balance.
In 2021, Russia and Ukraine represented almost 30% of grain exports worldwide, and their conflict had raised the potential for tighter supplies in a handful of the world’s poorest countries.
World prices have dropped nearly 30% since the possibility of a deal started to surface, and the agreement being put on ice now risks significant price reversals in wheat, corn, sunflower seeds, and oil.
The UN, Turkey, and Ukraine said they are continuing with the grains export deal with a transit plan set for 16 ships on Monday.
