Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

War-Strained Wheat Market Faces Moment of Truth

Commodities Jul 01, 2022 09:09AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. War-Strained Wheat Market Faces Moment of Truth

(Bloomberg) -- The strained global wheat market is entering crunch time. 

July is a crucial part of the year because it’s when harvests start in the Northern Hemisphere and exports accelerate. The invasion of key producer Ukraine has already crippled its sales and attention now turns to how the war will affect the new season’s shipments and how well other countries can plug gaps.

Ukraine has resorted to exporting whatever it can by rail and river with sea ports blocked. Meanwhile, Russia is about to reap one of its biggest-ever harvests, though war-related logistical and financial constraints remain key questions about how much it can sell.

The sales pace from the Black Sea -- which historically makes up a quarter of global trade -- may be in focus more than ever. Despite slumping recently, wheat prices are much higher than normal for the time of year. That’s contributing to food inflation and prompting world leaders to pledge to do more to fight a hunger crisis. 

“We in grains have never traded a war market before, so this is all new,” said Dan Basse, president of Chicago-based AgResource. “The Russians are going to have a situation where they’re going to export wheat, but it’s not going to be as easy.”

Wheat shipments from top exporter Russia have remained largely normal since it invaded Ukraine, going to traditional customers. With new crops rolling in, the coming months will show whether it can sell the big volumes usually seen when exports peak.

Ukrainian export prospects remain bleak for now. There has been little progress toward restarting seaborne trade, terminal closures threaten to limit grain shipments to less than half their potential and Russian strikes have damaged crop facilities at ports. 

Looking Elsewhere

Any losses from the Black Sea mean importers will rely more on alternative shippers like the European Union. Even the U.S. -- often one of the most expensive origins -- has become more competitive.

There are already signs of a shift in trade. Egypt booked 350,000 tons of French wheat in a tender this week, double the amount it bought from Russia. The huge French volume is unusual, especially early in the season when Egypt normally buys from the Black Sea, adviser Agritel said.

Outside of tenders, the North African country also recently bought its first US cargo of soft red winter wheat since 2019.

Despite Russia having lots of wheat, its exports face challenges. Its agriculture sector hasn’t been targeted by sanctions, but unofficial measures have seen some banks and shipping companies cut back credit lines and services.

That’s making it hard to estimate exports. AgResource predicts Russian wheat exports at about 32 million tons this season and FAO-AMIS expects 35 million tons, near last year’s level. Meanwhile, the US government pegs them at a near-record 40 million tons and consultant SovEcon forecasts they’ll exceed 42 million tons.

Either way, loadings need to ramp up fast to hit their potential, and Russia’s plan to alter a grain-export tax may affect sales.

“On paper, they have the exports,” said Matt Ammermann, a commodity risk manager at StoneX. “It’s just there’s clear reasons they can’t export freely.” 



War-Strained Wheat Market Faces Moment of Truth

Related Articles

Oil edges lower as supply disruption concerns ease
Oil edges lower as supply disruption concerns ease By Reuters - Aug 11, 2022 3

By Laura Sanicola and Muyu Xu SINGAPORE (Reuters) -Oil prices drifted lower on Thursday after gaining more than $1 in the previous session, as concerns over supply disruptions...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email