On Monday, maize and wheat futures in Chicago increased by more than 2% as worries about world supply were stoked by Russia’s decision to leave a Black Sea export pact.
After peaking at $8.93 earlier in the day, the most active wheat contract on the Chicago Board of Trade (CBOT) was up 5.7% at $8.77-3/4 a bushel at 0816 GMT, marking its highest level since October 14. In March, wheat futures reached a record high of $13.64 a bushel. Soybeans increased by 0.6% to $14.09-1/4 a bushel, while corn increased by 2.6% to $6.98-1/4 a bushel.
According to a trader from Singapore, this is an inflationary action, supporting the prices of wheat and corn. Prices have increased, but whether they go up any higher will depend on how things play out. Moscow withdrew from the Black Sea Treaty on Saturday in response to a massive drone strike against the Ukrainian navy in the Russian-occupied Crimea peninsula.
Is Russia Using Food as a Weapon?
Kyiv says Russia is looking for excuses to withdraw from the pact, while Washington claims food has become a weapon. Following Russia’s departure, tons of wheat scheduled for delivery to Africa and the Middle East are in jeopardy. Ukrainian corn shipments to Europe should also suffer.
According to the U.N., Turkey, and Ukraine, the contract for the shipment of grains is moving forward. Moreover, they set up a transit plan for 16 ships. The U.N. mediates the grains agreement and decides the ship routes. A Joint Coordination Centre inspects the ships (JCC) made up of U.N., Turkish, Russian, and Ukrainian authorities.
Because Russia and Ukraine are two of the biggest producers of wheat, the grain markets have closely watched changes in the eight-month-old invasion by Moscow. As Russia continued its aerial strikes, air raid sirens sounded throughout Ukraine. According to Ukrainian officials, an attack on the energy infrastructure resulted in the loss of water and power in several locations.