Russia-Ukraine War Threatens Wheat Supply, Jolts Prices

[mahatmakanejeeves]

MARKETS | COMMODITIES

Russia-Ukraine War Threatens Wheat Supply, Jolts Prices

Poor harvests have left global wheat inventories low and fighting has jeopardized Black Sea exports

By Ryan Dezember
https://twitter.com/RyanDezember
[e-mail]
March 13, 2022 8:00 am ET

Russia’s invasion of Ukraine threatens a big portion of the world’s wheat supply and has sent prices on a dizzying ride to new highs as well as the sharpest weekly drop in years.

Wheat stockpiles were already running low and prices were the highest in years thanks to two years of poor growing weather when Russia’s attack jammed up Black Sea trading and endangered nearly a third of the world’s exports. The invasion prompted fears of food shortages in countries fed with imported grain and pushed prices to new highs.

Milling wheat in Paris and the most-traded U.S. futures contract, for soft red winter wheat delivered to Chicago, notched record prices early in the week. Then they plunged. Chicago futures ended the week 8.5% lower, the worst weekly performance since 2014 when wheat was coming down from a drought-induced spike. French markets, as well as on-the-spot trading in St. Louis and Kansas City, followed similar arcs.

Still, the benchmark U.S. price, at $11.07 a bushel, is 72% higher than a year earlier and analysts expect the war will keep wheat high. Germany’s Commerzbank AG on Friday boosted its spring-quarter price forecasts by 19% for Chicago futures and by about 14% in Paris. ... Rising wheat points to further inflation of food prices and another force blunting the post-pandemic economic recovery. Global food prices hit an all-time high in February, according to the United Nations’ Food and Agriculture Organization. U.S. food prices in February were up 7.9% from a year earlier, according to the Bureau of Labor Statistics, taking a big bite out of Americans’ purchasing power.

{snip}

Write to Ryan Dezember at [e-mail]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the March 14, 2022, print edition as 'Pressures on Wheat Supplies Jolt Prices.'

[elleng]

1. Damage to Ukraine's planting season due to war suggests serious issues.