Ukraine war sends wheat soaring 25% this week, worsening already high food prices

The higher prices make wheat more expensive for food makers, who will likely pass the higher costs on to consumers. PHOTO: REUTERS

SINGAPORE (REUTERS) - Russia's invasion of Ukraine has sent wheat prices soaring to a 14-year high, exacerbating already high food prices.

Wheat futures on the Chicago Board of Trade (CBOT) rose 5.1 per cent on Thursday (March 3), reaching prices not seen since 2008.

The higher prices make wheat more expensive for food makers, who will likely pass the higher costs on to consumers.

Damage to Ukraine's export infrastructure following Russia's invasion has raised concerns over longer-term disruptions to supply from the Black Sea region.

The most-active wheat contract on the CBOT was up 3.3 per cent at US$10.76 a bushel by 0244 GMT, after climbing to its highest since March 2008 at US$11.34 a bushel earlier in the session.

Wheat futures have rallied around 25 per cent in just four sessions.

Corn rose 1.8 per cent to US$7.38 a bushel and soya beans climbed 0.8 per cent to US$16.76 a bushel.

Russia and Ukraine account for about 29 per cent of global wheat exports, 19 per cent of corn exports and 80 per cent of exports of sunflower oil, which competes with soya bean oil.

Ukraine has suffered damage to its ports and other export facilities with Russian troops invading the country, while Western sanctions have hit Russian supplies.

Russian troops are in the Ukrainian port city of Kherson and forced their way into the council building, the mayor said after a day of conflicting claims over whether Moscow had made the first major gain of a city in its invasion that began eight days ago.

The United States is preparing a sanctions package targeting more Russian oligarchs as well as their companies and assets, two sources familiar with the matter said on Wednesday, as Washington steps up pressure on Russian President Vladimir Putin.

The European Union will consider letting farmers use fallow land, notably to grow protein crops for livestock feed, to counter disruption to supply from Ukraine, officials said.

In the soya bean market, Brazil's 2021/2022 crop is likely to be 121.17 million tonnes, StoneX consultancy forecast, cutting 4.2 per cent off its February projection due to a drought that has hurt farms in the south.

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China bought soya beans from the US on Tuesday as American cargoes were competitive against Brazilian shipments, despite it being the peak period for South American soya export.

China booked at least five cargoes, around 300,000 tonnes, of US soya beans for shipment in April-May, according to an Asia-based trader with knowledge of the deal.

Commodity funds were net buyers of CBOT wheat futures contracts, and net sellers of corn, soya bean, soya bean oil and soya meal futures contracts on Wednesday, traders said.

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