The end of the grain agreement with Russia caused a new rise in wheat prices. The Russian attacks on the Ukrainian port city of Odessa are driving the price even higher.
On the US futures markets, the price of wheat rose by a good five percent to $6.69. Earlier, Russia had carried out airstrikes on the port city of Odessa for the second night in a row. From there, wheat from the Ukraine, the so-called granary of Europe, is shipped worldwide.
At the beginning of the week, grain had increased in value by 4.2 percent after Russia failed to extend the grain agreement with Ukraine. The July 2022 agreement stipulated that Ukraine could ship grain from three Black Sea ports despite the Russian war of aggression. The agreement has already been extended twice.
Türkiye to mediate between Russia and Ukraine
Now the Turkish President Erdogan should mediate between Russia and Ukraine. Nevertheless, Ukraine now wants to export wheat and other grains by sea. “Even without the Russian Federation, everything must be done to ensure that we can continue to use this Black Sea corridor,” said Ukrainian President Volodymyr Zelenskyy.
According to the Ukrainian armed forces, port facilities with a grain terminal and an edible oil terminal were also hit in the attack on Odessa. In addition, tanks and loading facilities were damaged in the attacks.
USDA expects record harvest
Wheat has become significantly cheaper in recent months. Since the beginning of the year alone, the price has fallen by 15 percent. The US Department of Agriculture (USDA) recently forecast a record wheat crop this year. The USDA expects almost 790 million tons of global wheat harvest in the global wheat harvest. That would be 1.5 million tons more than in the previous year.
Last but not least, this forecast, but also the two-time extension of the grain agreement, had contributed to the easing of wheat prices. Nevertheless, they are still around 25 percent more expensive than three years ago.
It is still unclear what the consequences of the suspension of the agreement will be. Grains from Ukraine are mostly imported from North African and Asian countries, data from the International Trade Center shows. In Europe, Turkey, Romania and Spain are among the largest wheat importers from Ukraine, followed by Egypt and Poland. According to Statista, Germany imports around 0.3 percent of Ukraine’s total wheat exports.