Wheat climbs as attack poses Risk for key Russian export route

Wheat extended gains after Ukraine used sea drones to cripple a Russian naval vessel and an oil tanker over the weekend, posing a risk for a key export route for Russian commodities through the Black Sea.

Top wheat shipper Russia moves most of its grain through the waterway. It is in the midst of a second bumper harvest, making this a crucial time for getting crops to markets and ensuring enough supply to constrain global food costs.

The attack follows multiple strikes at Ukrainian sea and river ports. Russia last month exited a deal that ensured a safe corridor for Ukrainian exports from three Black Sea ports. Ukrainian shipments are now confined to river and land routes, and its harvests are decreasing as the war continues. 

Futures in Chicago climbed as much as 3.4% to $6.545 a bushel on Monday before paring the advance to about 1.9% as of 5:20 a.m. local time. Milling wheat in Paris rose about 1.4%.

“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 at broker and adviser IKON Commodities.

Still, commercial ships continued to pass through the Kerch strait Saturday after the attack, Bloomberg reported. Chicago wheat futures remain more than 15% lower this year as Northern Hemisphere harvests roll in, replenishing near-term supplies in some major exporters. 

Egypt, one of the world’s top buyers, plans to hold a fresh import tender on Tuesday. That will offer fresh insights into which wheat-export origins remain the most competitive, after the nation primarily booked Russian supply in its prior tender last week.