Wheat prices surge as Putin assails Ukraine grain deal

Wheat futures climbed almost 7% after Russian President Vladimir Putin criticized a recent grain deal with Ukraine, heightening attention on the sales outlook from the Black Sea region. 

The grain shipment corridor from Ukraine is not helping poorer countries, as the majority of supplies are going to Europe, Putin said during the Vladivostok Economic Forum. It may be worth discussing restrictions on the routes with Turkish President Recep Tayyip Erdogan, he added. 

The export deal, forged in July, was brokered by Turkey and the United Nations. It’s valid for an initial 120 days, and markets remain sensitive to any signals from politicians on its future. Ukraine is one of the world’s top crop shippers and the resumption of flows from its Black Sea ports has helped ease global grain costs, though much hinges on whether the pace holds. 

Russia, as well as poor countries, were deceived, even though “we have done everything to reach these agreements, we adhere to them and ensure them,” Putin said. 

Russia is struggling to export its own bumper wheat harvest. Shipments in July and August fell 22% versus a year earlier, despite a bigger crop. Food sales have been exempted from western sanctions, though some banks and shippers remain wary of doing business there. 

“Putin has no interest in seeing Ukraine benefit from large grain sales at a time when sales from his own country are sluggish following a big crop,” said Arlan Suderman, chief commodities economist at US-based StoneX.

More than 2 million tons of grain and other foodstuffs were shipped from Ukrainian ports since early August, according to data posted by the UN. That includes recent cargoes to Turkey, Spain, China, Italy and Somalia. 

A spokesperson for the UN secretary-general last month said the corridor is helping to restrain world food prices, which had soared after the outbreak of the war. That would benefit all commercial buyers. The first wave of ships to depart had been stuck at port for months and headed to destinations contracted before the invasion. 

Mykhailo Podolyak, an adviser to Ukraine’s president, told Reuters on Wednesday that Russia has no grounds to review the Ukraine grain-export deal and the terms of the agreement were being observed. 

Chicago wheat futures for December delivery rose as much as 6.9% to $8.735 a bushel, the highest since July 11, to reverse earlier losses. Paris wheat also climbed.

In other markets, Chicago corn for December rose as much as 1.8% to $6.88 and November soybeans gained as much as 2.4%.