Wheat Soars After US Warns of Explosives at Ukrainian Sea Ports

Wheat prices jumped again, bringing their three-day gain to 13%, after the US warned that Russia has laid mines at Ukrainian grain ports.

The US alert, based on intelligence, came after Russia on Wednesday said that all ships sailing to those ports would be considered military vessels. The threats have dashed hopes that Ukraine will be able to keep exporting grains via the Black Sea — historically its most important shipping route — forcing supplies to world markets through narrower and more cumbersome avenues.
The latest moves signal Russia is ratcheting up efforts to weaponize food trade, with Ukraine still among the world’s major grain suppliers despite the war. Earlier this week Russia ended the Black Sea grain deal, which had helped to keep trade flowing for a time and marked a rare example of Russian cooperation during its war in Ukraine.
In the days since its withdrawal from the accord, which was initially agreed a year ago, Russia has repeatedly targeted Ukraine’s agriculture infrastructure — shelling ports and damaging crop terminals. Ukraine’s largest sunflower-oil producer, Kernel SA, said damage at one of its facilities could take at least a year to repair.
Targeting such infrastructure “marks a new phase in the conflict,” according to Paris-based adviser Agritel. On top of that, export capacity is being shut off at the same time as many of Ukraine’s crops are coming to harvest.
All ships using the Black Sea corridor had departed Ukraine before the grain deal came to a close. The last vessel — the TQ Samsun — cleared its outbound inspection on Monday in Istanbul. The Black Sea ports are a vital artery for Ukraine’s crop sales abroad, previously accounting for the bulk of its shipments.

The shutdown — and the new Russian shipping threats — will heighten the need for alternative routes to get Ukrainian crops to market. The nation has increased reliance on its Danube River ports and rail and road routes via the European Union throughout the war.
The grains rally sparked renewed fears of food inflation. Prices had, until recently, been moderating, due in part to the Black Sea accord. But the costs of many products made from wheat, such as flour and breakfast cereal, have continued to climb. Grain supply risks may raise costs for food manufacturers once again.

“We are working with all partners internationally to make sure that the grain won’t rot in the silos in Ukraine in the coming weeks, but get to those people in the world who desperately need it,” German Foreign Minister Annalena Baerbock said to reporters before a European Union meeting of foreign ministers in Brussels.
Other Prices:

Wheat futures for September delivery rose 1.4% to $7.385 a bushel at 5:02 a.m. in Chicago, touching the highest for a most-active contract in more than three weeks
Corn rose 1.1%, putting its gain so far this week to 9%
Soybeans climbed 0.4%
This article has been republished from The Financial Express