Wheat edged lower but is still poised for a weekly gain of more than 9%, as military drills in the Black Sea add to the risks disrupting grain trade from a vital producing region.
Russia’s navy on Friday said it conducted a live fire exercise in the waters. That comes at the end of a volatile week that saw the Kremlin terminate a deal allowing Ukraine to export grain via some Black Sea ports, and then attack the nation’s agricultural facilities. Both countries have warned that ships headed to each other’s ports could be considered military targets.
Russian missiles hit a grain depot in the Odesa region overnight, causing a fire and damaging farm equipment, its regional administration said on Facebook.
The rise in prices could again stoke food-commodity costs, which had moderated since the outbreak of the war last year.
“Markets have reacted violently this week from the geopolitics following Russia’s withdrawal from the Black Sea Grain Initiative, and continued weather concerns across much of the Northern Hemisphere,” ADM Agriculture Ltd. said in a note. “The hype up in military action will also cause ship owners and insurers to be less confident in sending ships into what is now a ‘war zone’ environment.”
The flaring of Black Sea tensions adds to risks in global grain markets. Heat is threatening corn crops in southern Europe. And drier conditions are ahead for corn and soy crops in the US Midwest and Delta next week, Maxar said in a report. India added to the food supply shocks on Thursday, saying it will ban some rice exports.
The International Grains Council raised its global grain production estimate for the 2023-24 season, but trimmed prospects for wheat.
--With assistance from Volodymyr Verbyany.
Author: Jasmine Ng, Megan Durisin and Aliaksandr Kudrytski
