Wheat prices have not yet reacted to the statement of the Ministry of Defense of Ukraine about the danger of shipping in the Black Sea

After the statement of the Ministry of Defense of the Russian Federation that all ships heading to the ports of Ukraine will be considered military targets, the Ministry of Defense of Ukraine announced a symmetrical position regarding the ships that will enter the Russian ports in the Black Sea.

In yesterday's statement, the Ministry of Defense announced that from 00:00 on July 21, all ships in the Black Sea bound for the Russian Federation or Ukrainian ports occupied by it will be considered potential carriers of military cargo with all the corresponding risks.

Ukraine also announced a ban on shipping in the far-eastern part of the Black Sea and the Kerch-Yenikal Strait from 05:00 on July 20, 2023 due to significant danger.

"By threatening civilian ships that transport food from the ports of Ukraine, attacking the civil infrastructure of peaceful cities with missiles and drones, deliberately creating a military threat on trade routes, the Kremlin has turned the Black Sea into a dangerous zone, therefore the Russian authorities must bear responsibility for all risks," the Ministry of Defense of Ukraine said.

We will remind that such a statement was preceded by three consecutive night attacks in Odessa, where the main deep-sea ports of Ukraine are located, as well as the official withdrawal of the Russian Federation from the grain agreement.

On Wednesday, the Russian Federation said that all ships in the Black Sea bound for Ukrainian ports will be considered carriers of military cargo and legitimate targets. This led to an increase in the price of wheat futures, given the possible danger for ships that will enter the ports of the Danube.

Against the background of the statement of the Ministry of Defense of the Russian Federation and shelling of Ukrainian ports, wheat quotations on the stock exchanges in Chicago and Paris rose by 8.2% and 8.5%. But prices hardly reacted to the counter-statement of the Ministry of Defense of Ukraine, since the market does not believe that Ukraine will attack civilian ships, so such threats will only lead to an increase in the cost of insurance for ships heading to the ports of both countries.

Yesterday, September futures rose:

• by 0.9% to $321.4/t - for hard winter HRW wheat in Kansas City,
• by 0.5% to $331.4/t - for hard spring HRS-wheat in Minneapolis,
• by 0.8% to €255.75/t or $284.25/t - for wheat on the Paris Euronex.

At the same time, prices for Black Sea wheat in Chicago fell by 0.2% to $238.5/t, and for soft winter SRW wheat in Chicago remained at $267.4/t.

Export sales of wheat from the USA for July 7-13 amounted to only 170,000 tons, and in general for the season - 5.19 million tons, which is 31.6% lower than last year's pace.

IGC experts lowered the forecast for world wheat production in FY 2023/24 by 2 million tons to 784 million tons due to a decrease in the estimate for Argentina from 19 to 17.5 million tons.