Wheat prices on the world market rose to a three-year high due to risks for exports from the Black Sea

The market is reacting to the threat of a new escalation of the Russian-Ukrainian war and the risks of disruptions in grain supplies from the Black Sea region.

Wheat futures in Chicago continued their rapid growth and reached their highest level in three years. Bloomberg writes about this.

As of August 27, quotes had increased by another 2.6%, to the highest level since July 2023. The day before, wheat rose by 6.4%, and in general, its price has increased by about 19% since the beginning of August.

Investors are primarily concerned about the situation with the export infrastructure of the Black Sea. Russian attacks have already damaged Ukrainian ports and grain terminals, and further escalation could lead to new disruptions in shipments. Russia and Ukraine provide more than a quarter of global wheat exports, and are also major suppliers of corn, barley and sunflower oil.

“The market is very concerned about logistical constraints in the event of an escalation of the conflict. If the situation in the Black Sea cannot be resolved and access for ships is not improved without jeopardizing their safety, the rally will continue,” said Advantage Grain CEO Chris Nicolaou.

The main buyers of Black Sea grain remain countries in the Middle East, Africa and Asia. If supplies from the Black Sea decrease, importers will have to switch to more expensive grain from distant markets, in particular Australia and Argentina. This will increase transportation costs and may increase global food inflation.

Also, as USM reported, without a maritime corridor, Ukraine could lose up to half of its iron ore exports.