June 15, 2024

Wheat Prices Skyrocket As Russia Attacks Key Grain Hubs

  • Wheat prices on Wednesday were on track for the biggest one-day gain since February 2022.
  • On Tuesday, Russia launched missiles at the port of Odesa, one of Ukraine’s main grain export hubs.
  • Russia this week also backed an agreement that ensured safe passage for Ukrainian exports in the Black Sea.

Wheat prices rose sharply on Wednesday after the Russian attack in the port of Odesa and Moscow’s decision to withdraw from a key trade agreement that allowed Ukrainian exports to enter the Black Sea safely.

Missile bombing has targeted vital Ukrainian grain facilities, and wheat prices, while still below last year’s highs, are on pace for their steepest one-day gain since February 2022, when Vladimir ordered Putin his “special military operation” for the first time.

In Chicago, soft red winter wheat futures added about 8% to trade at $7.25 a bushel, while hard red wheat jumped 5.2% to reach $8.70 a bushel.

The Wall Street Journal It was reported earlier this week that the Kremlin will re-enter the Black Sea export agreement only if certain demands are met. Moscow has repeatedly threatened to pull the plug on the market, but now wants the West to step in and facilitate food and fertilizer exports amid sanctions.

The initial agreement, brokered by Russia, Ukraine and Turkey last July, allowed Ukrainian exporters to ship corn, wheat and other goods from three ports around Odesa.

Now, last year’s fears that global food security could be at risk are being repeated, as Ukraine has some of the world’s most important trade routes for wheat and other grains. The now suspended agreement allowed Ukraine to export more than 32 million tons of food.

The President of Ukraine Volodymyr Zelenskyy said on Monday, according to the Journal, that the nation was ready to stand by the deal as well as possible without the participation of Russia.

As for Russia, Putin has pushed its economy forward over the past 16 months. It has been barred from major trading partnerships, blocked by impunity, and stripped of its role as the world’s top energy exporter.

Even as the Kremlin tries to hide its economic troubles, a closer look under the hood suggests a crumbling empire.

“A lot of people still don’t understand how bad the situation could be in Russia,” Volodymyr Lugovskyy, a professor of economics at Indiana University, told Insider in a recent interview. “Russia could fall into multiple pieces, like the Soviet Union, and that might not be a bad thing for the world.”

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