Wheat prices continued to rise after Ukraine had used maritime drones to damage a russian oil tanker and warship, jeopardising a key export route for russian goods through the Black Sea.
This is reported by Bloomberg.
According to the publication, russia, the largest wheat supplier, transports most of its grain by water and is currently in the midst of a second record harvest, making this time crucial for delivering crops to markets and ensuring sufficient supply to restrain global food prices.
"The risk in the Black Sea is increasing by the day and any threat to Russian exports is much more potent than a threat to the Ukrainian export corridor," said Ole Houe, chief executive officer of broker and adviser IKON Commodities.
Futures in Chicago rose 3.4% to $6.545 per bushel on Monday, trading at $6.4725 by 1:55 p.m. in Sydney. On Friday, prices closed 1% higher, losing most of a 4.3% intra-day rise after Ukraine's attack on a russian military ship. Movement in the port of Novorossiysk was halted for several hours.
Kyiv's decision to move the war with russia to the Black Sea followed after vladimir putin pulled out of a grain agreement mediated by the United Nations on July 17 and launched a coordinated missile campaign against Ukrainian ports. As a result, grain exports from Ukraine were substantially reduced, while russian exports remained unaffected.
The Black Sea route also accounts for 15% to 20% of the oil that russia sells daily on the global markets, and it is also the main transit corridor for Kazakh oil.
Wheat futures are still falling, almost 20% this year, due to prospects of high yields from key exporters and still large global stock buffers.
Background. Mind previously reported that, according to FT, Ukraine's strike on a russian oil tanker could raise concerns in the White House.