Key Takeaways:
Chicago wheat futures closed at $7.55 per bushel Thursday, up 0.9%, the highest since July 2023, after Russia rejected a Black Sea grain shipping truce.
"It looks like their position is that they will not attack our grain corridor only if we stop attacking their energy sector," Ukrainian President Volodymyr Zelenskyy said, after Moscow dismissed the ceasefire proposal as "unacceptable."
Wheat has gained roughly 30 percent from late-June lows, with one session hitting the daily limit-up of 45 cents. Russia and Ukraine together account for about a quarter of global wheat production. Ukraine exported only about 500,000 tonnes of grain in the first half of August, roughly one-fifth of its potential volume, according to Agriculture Minister Taras Vysotskyi. Three grain terminals at Russia's Novorossiysk port suspended operations after sustaining damage, with repairs at NKHP potentially taking up to four months.
The International Grains Council cut its 2026-27 global wheat production forecast last week, citing European heatwaves. With El Niño weather risks and the broader geopolitical fallout from the US-Iran conflict adding upward pressure, wheat prices could extend gains as the harvest season peaks.
Andrick Payen, an analyst at Rabobank, said exporters are seeking alternative routes, but "these routes are unlikely to compensate for the lost throughput capacity at Odesa and Novorossiysk." Ports in Ukraine's Greater Odesa region handle around 90 percent of the country's grain shipments.
Agricultural commodity analyst Andrey Sizov said on X that "nothing like this has ever happened in the history of modern grain markets — neither the 2010 Russian grain export ban nor the early stages of the war in 2022 can compare to the current situation."
The wheat rally lifted other grains. CBOT corn rose 13 cents to $5.36-1/2 per bushel, reaching a lifetime high, driven by wheat strength and lower-than-expected U.S. corn yield projections from last week's Midwest field tour. CBOT soybeans gained 28-1/4 cents to $12.66 per bushel, supported by continued Chinese purchases of U.S. soybeans.
The U.S. Treasury Department announced sanctions Monday on 60 individuals, entities and vessels tied to Iran, but excluded Chinese financial institutions. "I believe a lot of people were surprised that China was not included on the sanctions list, and this gives us more confidence that China will continue buying soybeans," Dan Basse, president of AgResource Company, said.
This article is for informational purposes only and does not constitute investment advice.
