Wheat Rises as Black Sea Supply Risks Mount

Wheat rose to around $6.9 per bushel in early October, extending its recovery from a more than one-year low reached on September 30, as renewed threats of an escalation in the Russia-Ukraine war fueled concerns over further disruptions to global grain supplies through the Black Sea. Over the weekend, the Russian government said its military would intensify strikes on Ukrainian infrastructure in a message distributed by the Defense Ministry, while President Volodymyr Zelenskyy said Ukrainian forces would continue targeting Russian energy facilities, particularly oil refineries. Wheat supplies from the Black Sea, one of the world’s key grain-trading corridors, have been severely constrained since July, with any further escalation threatening to disrupt shipments and complicate Turkey’s efforts to keep the vital trade route open.

Wheat fell below $7 a bushel, the lowest since August 25, and more than 8% below the 3-1/2-year high of $7.67 reached on August 28, amidst diplomatic efforts to restore grain shipments from the Black Sea. Ukrainian President Volodymyr Zelenskiy said India, Turkey, Egypt and other Middle Eastern countries were involved in discussions on reopening shipping routes, while Turkey has presented Moscow with proposals on maritime security. A ceasefire could allow Russia to rapidly restore as much as 80% of its Black Sea grain-terminal capacity. Ukraine’s grain inventories stood at 24.6 million metric tons on September 1, up 10 million tons from a year earlier, although attacks on ports and vessels continue to hamper exports. Importers in Asia, the Middle East and Africa have increasingly sought alternative supplies. France recently shipped 60,000 tons of wheat to Yemen, while Argentine export commitments have reached their highest level in five years for this point in the season.

Wheat fell below $7 per bushel in late September, remaining near its lowest level since August 25 as traders assessed fresh details of the US-China trade agreement, including tariff reductions on agricultural products. Both countries announced plans to lower tariffs on roughly $30 billion worth of imports from each side, covering a broad range of American farm goods including wheat. The two sides also agreed to establish an agricultural working group to facilitate future negotiations and improve market access. Still, traders are awaiting tangible signs of broader Chinese purchases, as progress has been limited on a separate pledge made during the Trump-Xi summit in May to buy an additional $17 billion worth of US agricultural products. Elsewhere, traders continued to monitor Black Sea export flows after Ukrainian President Volodymyr Zelenskiy stated that India, Turkey, Egypt and other Middle Eastern countries were involved in efforts to restore safe shipping through the Black Sea.