Wheat prices jumped Friday as traders weighed potential shipping disruptions following Ukraine’s attacks on top exporter Russia.
Strikes by Ukraine on Russian oil refineries and several tankers off the country’s coast could lead Russia to close the Azov-Don canal and the Kerch Strait, which connects the Black Sea and the Sea of Azov. Shipping was temporarily stopped through a canal that links the Don River to the Sea of Avoz, Reuters reported citing two grain industry sources.
While it’s not yet known if Russia’s grain flows were impacted, prices for wheat gained as much as 4.8%, the most since mid-May. Paris milling wheat futures, the benchmark for European prices, climbed as much as 5.7%, the biggest gain since mid-April.
The surge in wheat came just ahead of the US Department of Agriculture’s monthly supply and demand outlook released at midday. The agency pared world stockpile estimates to 272.8 million tons, in line with the expectations of analysts surveyed by Bloomberg. US production of 1.536 billion bushels of wheat would be the smallest since 1970.
Still, even with lingering concerns about shipping disruptions, the USDA raised its production estimates for Russia and Ukraine “on continued favorable conditions for their winter wheat crops.”
The agency also projected smaller-than-expected US supplies of corn amid stronger American corn exports as well as domestic feed use. Corn gained as much as 2.2% after the USDA data was released.
The report was “pretty friendly on the corn, less friendly on wheat than anticipated,” said Charlie Sernatinger, head of grain futures at Marex.
