Wheat prices rose to a 3-month high against the backdrop of a possible increase in aggression from the Russian Federation

This week, wheat prices on world exchanges rose to a 3-month high amid Russian threats to escalate the war in Ukraine, which could lead to a reduction in grain supplies from the Black Sea region.

Russia's intentions to mobilize about 300,000 people and hold referendums in the occupied territories, together with threats to use nuclear weapons, became the main drivers of the rise in wheat prices, since the main export stocks this season are in the Russian Federation.

After a decrease of 2-3% on Monday, stock market quotations have increased by 5-8.8% since Tuesday:

• by 8.8% or $26.9/t to $332.1/t – December futures for soft winter SRW wheat in Chicago,
• by 6.3% or $21/t to $355.3/t - December HRW hard winter wheat futures in Kansas City,
• by 5% or $17/t to $354.3/t - December futures for HRS durum wheat in Minneapolis,
• by 2.2% or $7/t to $319.5/t - October Black Sea wheat futures in Chicago,
• by 6.5% or €21.25/t to €347/t or $326.68/t - December wheat futures on Paris Euronext.

On the American Plains, Canadian prairies and the east of the Russian Federation, dry weather favors the harvesting of spring wheat, which improves harvest forecasts.

During the week, the Russian Federation exported 600,000 tons of wheat, and in total in the season as of September 21 - 7.6 million tons. The pace of exports is inferior to last year, although the export forecasts have been increased from 35 to 50-55 million tons. Traders do not risk buying grain from Black Sea ports because of sanctions against the Russian Federation and a possible escalation of the war in Ukraine.

During September 1-18, Ukraine exported 1.044 million tons of wheat, and in total in the season - 2.301 million tons, which indicates the importance of grain corridors for the export of domestic agricultural products.

Due to heavy rains, only 9% of the planned areas have been sown with winter wheat for the 2023 harvest in Ukraine, and as a result of military operations in the south and east, the areas sown will be reduced by 15-17%.

Purchase prices for wheat in the Black Sea ports of Ukraine remain at the level of UAH 8,000-8,200/t or $200-210/t. Traders are buying limited volumes, expecting grain corridors to shut down in November. Wheat supply volumes remain high, as farmers vacate warehouses for corn storage.