Wheat hits 14-year highs as Russia-Ukraine conflict curbs supply

Michael Hogan, Reuters

Posted at Mar 07 2022 09:05 PM

Wheat grains from a threshing machine. Yahya Ahrab, EPA-EFE file photo
Wheat grains from a threshing machine. Yahya Ahrab, EPA-EFE file photo

HAMBURG - Chicago wheat futures rose over 7 percent on Monday, rising limit up to 14-year highs on concern global supplies will be disrupted until the Russia-Ukraine conflict is resolved.

Russia and Ukraine together account for about 29 percent of global wheat exports and 19 percent of corn exports.

Since Russia launched the campaign it calls a "special military operation" on Feb. 24, commodity markets have surged.

Wheat markets rose over 40 percent last week, the biggest weekly rise on record. Chicago Board of Trade most-active wheat rose 7.2 percent, up by the daily limit of 85 cents, to $12.60-1/4 a bushel at 1138 GMT, its highest since March 2008. 

Corn rose 2.7 percent to $7.75-1/4 a bushel, soybeans rose 2.05 percent to $16.94 a bushel. Corn and soybeans are around their highest since September 2012.

"Until the fighting in Ukraine ends, it cannot be expected that wheat and corn exports from Ukraine and Russia will resume," one European trader said.

Russia and Ukraine provide 80 percent of the world's exports of sunflower oil, which competes with soyoil.

Ukrainian ports remain closed and dealers are reluctant to trade Russian wheat after Western sanctions, so buyers are seeking alternative suppliers. 

Export demand for European Union wheat surged last week and is expected to continue to rise. 

"With such a sudden run on other sources, there is worry that some countries will introduce export restrictions to stop their own domestic supplies being sucked away," another trader said, but added some big importers were still willing to buy for fear prices will rise further.

Bulgaria's government said it will expand wheat reserves, while producers fear an export ban. 

Already, Hungary has banned all grain exports with immediate effect because of the price increases. 

Big importer Algeria on Sunday issued a tender to buy wheat. Wheat purchase tenders were also issued on Monday by Taiwan and Tunisia. 

(Reporting by Michael Hogan in Hamburg, additional reporting by Naveen Thukral in Singapore, editing by Barbara Lewis)

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