Wheat up 6% as Russia quits Black Sea pact

Chicago wheat futures jumped 6 per cent and corn rose more than 2 per cent on Monday as Russia’s withdrawal from a Black Sea export agreement raised concerns over global supplies.

The most active wheat contract on the Chicago Board of Trade (CBOT) was up 6.1 per cent at $8.79-1/2 a bushel at 1221 GMT, having touched $8.93 for its highest since October 14, reports Reuters.

Wheat futures hit a record high of $13.64 a bushel in March.

Corn rose 2.4 per cent to $6.97-1/2 a bushel and soybeans added 0.6per cent to $14.09-1/4 a bushel.

“This is an inflationary move, supporting prices of wheat and corn,” one Singapore-based trader said. “Prices have risen but further gains will depend on how the situation unfolds.”

European markets also rose, with benchmark December milling wheat futures on Paris-based Euronext up 3.6per cent at 349.50 euros ($346.70) a tonne after touching a two-week high of 353.25 euros a tonne.

Moscow suspended its participation in the Black Sea deal on Saturday in response to what it called a major Ukrainian drone attack on its fleet in Russia-annexed Crimea.

Kyiv said Russia was making an excuse for a prepared exit from the accord and Washington said it was weaponising food.

On Monday Russia said it would be dangerous for Ukraine to continue exporting grain via the Black Sea because it could not guarantee the safety of shipping in these areas.

Hundreds of thousands of tonnes of wheat booked for delivery to Africa and the Middle East are at risk after Russia’s withdrawal from the pact, with Ukrainian corn exports to Europe also expected to be hit, two other Singapore-based traders said.

However, exports out of Ukrainian ports continued on Monday with record volumes under the grain deal, Kyiv said, suggesting Moscow had stopped short of reimposing a blockade.

Under the U.N.-brokered grains deal, a Joint Coordination Centre (JCC) comprising UN, Turkish, Russian and Ukrainian officials agrees on the movement of ships and inspects the vessels. More than 9 million tonnes of corn, wheat, sunflower products, barley, rapeseed and soy have been exported from the Black Sea since July.

Corn was the main grain exported under the Black Sea Grain Agreement, followed by wheat.

Grain markets have been sensitive to developments in Moscow’s eight-month-old invasion of Ukraine because the two countries are among the world’s largest suppliers of wheat.

“It will be necessary to follow closely if negotiations with Russia resume in the coming days, as geopolitical elements are difficult to predict,” French consultancy Agritel said.

The grain export deal was set to expire later this month and talks were under way to expand and extend it for another year.