8 March 2022
2 minute read
Price increase driven by Black Sea supply concerns
European wheat jumped again on Monday, hitting record highs as the war in Ukraine and deepening Western sanctions against Russia fuelled concerns about lasting disruption to Black Sea exports, reported Reuters.
Benchmark May wheat on the Paris-based Euronext exchange, unofficially closed up 25 euros, or 6.7%, at 396.75 euros ($431.47) a tonne, after earlier hitting a contract high of 424.00 euros.
Less active March, which expires this week, set another all-time record for Euronext at 450 euros, ending up 7.3% at 422.50 euros.
News the United States and European allies were considering a ban on imports of Russian crude oil added to investor nervousness.
Russia's invasion of Ukraine has already halted shipments from Ukrainian ports and was increasingly raising fears of damage to infrastructure and crops.
"High prices are there for a long time to come it seems," one futures dealer said. "Logistics are out, spring planting difficult and the next harvest at risk," he said of Ukraine.
Russia and Ukraine account for about 29% of global wheat exports and 19% of corn exports.
There was ongoing talk of large sales of French wheat as part of a surge in demand for European Union supplies to replace stalled trade with Ukraine and Russia, although volumes were hard to assess before loadings are scheduled at ports, traders said.
Euronext May rapeseed ended up 3.4% at 849 euros after earlier on Monday soaring to a record high of 852.50 euros, supported by concerns over Black Sea oilseed supply and soaring crude oil prices.
Export demand for German wheat to replace lost shipments from Ukraine and Russia was facing low farmer selling.
"There is considerable new demand in the market with some importers needing new supplies after the export disruptions from Ukraine and Russia, with both Algeria and Tunisia issuing tenders for wheat," a German trader said.
