Rabobank, Media Release, 20 July 2023
CBOT (Chicago Board of Trade) wheat prices soared eight per cent overnight, after Ukrainian ports were hit by Russian missiles and Russia’s Ministry of Defence warned that all vessels travelling to Ukraine’s Black Sea ports will be considered as potential carriers of military cargo.
This was the highest trading level of CBOT wheat since a spike in mid-June and previously in February this year, Rabobank senior grains analyst Dennis Voznesenski said. “As of this morning Australian time, CBOT wheat is trading at 725USc/bu (or A$391/tonne),” he said.
Mr Voznesenski said the latest price spike followed “a barrage of missile attacks on Ukrainian grain port infrastructure and Russia’s announcement that the flag countries of vessels travelling to Ukraine’s Black Sea ports will be considered involved in the Ukrainian conflict on the side of the Kiev regime – dashing hopes of external entities protecting Ukrainian vessels”.
He said information coming out of the region indicated Ukrainian grain export terminals and grain storage facilities on the Black Sea have been targeted and hit by Russia, including the largest port, Odessa.
Mr Voznesenski said following the expiry of the Black Sea Grain Initiative on Monday (July 17) after Russia’s withdrawal from the agreement (which had allowed safe passage of vessels carrying grain exports from Ukraine’s Black Sea ports), there were initially hopes that third party countries would escort and guarantee the safety of Ukrainian grain vessels moving through the Black Sea. However, he said, this has become very unlikely, “with NATO countries so far resisting the risk of a possible – and significant – escalation of the conflict”.
Mr Voznesenski said the rise in overseas wheat prices will likely have a direct impact on local Australian wheat prices, which have already been holding up due to restrained farmer selling.
“The reduced availability of grain from Ukraine has short and long-term implications for the global grain sector. In the short term, it means less export availability and during an important time period, Black Sea harvest, when the world relies on Ukrainian grain. In the long term, it means more grain stockpiled in Ukraine, which leads to lower Ukrainian prices, lower Ukrainian farm margins and lower planting,” he said.
Related story: Rabobank commentary: Russia withdrawal from Black Sea Grain Initiative
