November 16, 2025
Wheat prices gain over 8% as Russia-Ukraine tensions rise after the suspension of the grain deal

Wheat prices gain over 8% as Russia-Ukraine tensions rise after the suspension of the grain deal

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Commodities Corner

Last Updated: July 19, 2023 at 3:35 p.m. ET First Published: July 19, 2023 at 12:30 p.m. ET

Wheat futures score biggest daily gain since Feb. 2022

Russia announced early this week that it was suspending a deal reached a year ago that had allowed safe passage for grain cargo from Ukranian Black Sea ports.

Oleksandr Gimanov/Agence France-Presse/Getty Images

Wheat futures rallied by more than 8% on Wednesday to settle at the highest in three weeks, with tensions between Russia and Ukraine rising the wake of Moscow’s suspension of the Black Sea grain deal.

Russia has bombed an Odessa port in Ukraine for the last two days, and Ukraine bombed the Russia-Crimea Bridge “to start this latest escalation off a couple of days ago,” Jack Scoville, vice president of The Price Futures Group and writer of the Grains and Softs Report, told MarketWatch in an email. “The war is escalating — making any attempts to get Russia involved in a Black Sea grain deal again more and more remote.”

Read: Russia strikes critical port facilities in Odesa after Kremlin halts grain deal

“ “The war is escalating — making any attempts to get Russia involved in a Black Sea grain deal again more and more remote.” ”

— Jack Scoville, The Price Futures Group

“It is increasingly unlikely that any ship owner or ship insurer will take the chance on any passage of Ukrainian grain through the Black Sea, and maybe not for Russia, either,” Scoville, wrote in Wednesday’s report. “The world access to wheat from at least one, and perhaps both countries, just got a lot more restricted. 

The rise in tensions between the two nations follows Russia’s announcement early this week that it was pulling out of the Black Sea Grain Initiative, a deal brokered by the United Nations and Turkey in July of last year to help supply global markets with food and fertilizer. The two nations have been at war since Russia invaded Ukraine in February 2022.

Read: Why Russia’s decision to halt grain deal is stirring global inflation worries

Consulting agency UkrAgroConsult raised its expectations on Russian wheat exports, with the “thought that the grain export dispute would not be resolved,” said David Maloni, president of food service supply chain consulting firm Datum FS.

He believes the markets took it “as a sign that things may be worse than thought just a couple of days ago” and that may have led to the spike in prices Wednesday.

The most-active September futures contract for soft red winter wheat W00, +0.07% WU23, +0.07% rose 57 cents, or 8.5%, to settle at $7.27 3/4 a bushel in Chicago. That was the highest settlement since June 26 and biggest daily percentage climb since late Feb. 28, 2022, according to Dow Jones Market Data. December corn C00, -0.18% CZ23, -0.18% settled at $5.53 a bushel, up 18 1/2 cents, or 3.5%.

“It’s amazing how quickly the situation can change,” said Darin Newsom, Barchart senior market analyst, adding that news of Russia’s suspension of the grain deal on Monday didn’t immediately lead to a huge change in market sentiment.

Since then, though, Russia has been attacking key Ukrainian ports along the Black Sea, possibly with the goal of stopping all shipments, said Newsom.

Still, “fundamentally, the situation hasn’t changed,” at least based on the “carry” in Chicago futures spreads, he said.

The “carry” in futures spreads is the price relationship between contracts, Newsom explained. “We can measure how bullish or bearish these spreads are by how much carry (premium held by deferred contracts) the market is willing to pay of the total cost of storage and interest.”

Russia’s defense ministry issued a warning on the safety of vessels headed to Ukrainian ports from Thursday, Bloomberg reported Wednesday. New vessels headed to Ukrainian ports will be considered as potentially carrying military cargo, it said.

For now, there is “no sign of increased demand for U.S. wheat supplies,” said Newsom, but we’ll see if, or when, that changes.

Barron’s: Tesla Beat Earnings Estimates. This Is Why The Stock Is Down.

Tesla reported operating income of $2.4 billion and earnings per share of 91 cents from sales of $24.9 billion.

Myra P. Saefong, assistant global markets editor, has covered the commodities sector for MarketWatch for 20 years. She has spent the bulk of her years at the company writing the daily Futures Movers and Metals Stocks columns and has been writing the weekly Commodities Corner column since 2005.

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