The price of a bushel of wheat surged to levels not seen in more than a decade on Wednesday as investors anxiety surrounding potential supply shortages from the conflict between Russia and Ukraine stretched to its seventh day.
Wheat futures for May delivery
on the Chicago Mercantile Exchange surged to $10.28 a bushel, the highest since 2014, according to analysts at Commerzbank, who noted it rose by its 75 cent-limit, having climbed by its 50-cent limit on Tuesday.
“Both Ukraine and Russia are large producers of wheat, together accounting for around 30% of the world’s wheat exports, so this is one of the channels where the direct economic impact is acute,” said strategists at Deutsche Bank led by Jim Reid, in a note to clients.
Ukraine announced at the start of the week that its key Black Sea ports would remained closed until the Russian invasion ended, “meaning that no wheat shipments can be sent from Ukraine by sea for an indefinite period,” said Carsten Fritsch, commodity analyst at Commerzbank.
“Furthermore, shipping companies are no longer accepting orders for deliveries from or to Russia. And in any case virtually no buyer is likely to be willing at present to order wheat from Russia. This means that up to 30% of global wheat exports are now more or less cut off from the market,” said Fritsch.
He added that the Ukraine war may make it difficult to plant spring grains, reducing next season’s supply and sufficient alternative suppliers would be hard to find.
Corn and soybean oil futures prices have also been surging. May corn
futures were slightly lower at $7.224 a bushel, but remain at levels not seen since 2013.
A growing global unease over the continuing conflict in Eastern Europe has reportedly spurred China to start trying to secure supplies of energy and commodities, according to Bloomberg, which cited sources familiar with the matter. Officials are reconcerned about the effect of soaring prices of those commodities on China’s economy.