Russia's withdrawal from a deal that had kept Ukrainian grain flowing to world markets has sent prices soaring in recent days. A main beneficiary of the surge: Russia itself.
Wheat futures in Chicago recently climbed 12%, rising to the highest level since June 23. Futures tied to corn are up 9.3%.
The Kremlin said earlier this week that it would pull out of the international agreement that allowed Ukraine to resume its grain exports through the Black Sea.
Russia has since attacked key port cities in Ukraine, such as Odessa. And Russia's Defense Ministry said that it would consider every ship that passes through the Black Sea to Ukrainian ports as a potential carrier of military cargo, further spooking traders. Kyiv responded with a similar threat to Russian ships.
“The Kremlin wants and needs commodity prices, such as grain and oil, to go higher,” said Valerio Antonini, Chief Executive of Quanton Commodities, an agricultural trading house. "It's a message from Putin to the West, he is not playing now. We will see at least two to three weeks of very high tension."
Russia's latest intervention has triggered another period of volatility for grain markets, just as prices were beginning to settle. Grain prices had rocketed to record highs after Russia invaded Ukraine in February 2022, and had only returned to prewar levels in recent weeks.
A spike in grain prices since Russia quit a deal allowing the safe Black Sea export of Ukraine grain "potentially threatens hunger and worse for millions of people," the United Nations' aid chief told the Security Council on Friday.
"Some will go hungry, some will starve, many may die as a result of these decisions," Martin Griffiths told the 15-member council, adding that some 362 million people in 69 countries were in need of humanitarian aid.
EDITOR’S TAKE:
It appears that Russia’s decision will impact many people in several nations around the globe with a significant impact on grain markets. U.S. farmers/ranchers benefit from improved commodity prices, but they certainly are working hard to end world hunger through humanitarian channels. It appears, however, that goal is more elusive with the latest action by Russia. It is extremely unfortunate that food has become a political weapon in this very unpopular war between Russia and Ukraine. Someone needs to intervene with a peace proposal and put this conflict in the rear-view mirror.
