Chicago wheat jumps as Russia faces new sanctions

Europe and the US are planning new sanctions against Russia
calendar icon 5 April 2022
clock icon 2 minute read

US grains futures rose for a second consecutive session on Tuesday, with wheat climbing more than 3% as Western countries considered potential new sanctions against top exporter Russia over civilian killings in Ukraine, reported Reuters.

The most active wheat contract on the Chicago Board of Trade (CBOT) rose as much as 3.3% to $10.43-1/2 a bushel. It was up 2.4% at $10.34-1/4 at 0706 GMT.

The United States and Europe were planning new sanctions against Moscow on Tuesday as the Russia-Ukraine crisis continued to disrupt grain supplies from the Black Sea region.

"Logistical issues in Ukraine are hampering grain and oilseed exports," analysts at J.P. Morgan said, adding that such challenges were likely "to leave agricultural trade flows in disarray indefinitely".

Exporters in Ukraine, the world's fourth-largest grain seller in the 2020/21 season, usually ship most of their commodities via the Black Sea and are scrambling to transport grains by rail as sea ports remain blocked by Russian forces.

New-crop demand for Russian wheat has been slow and it has become "difficult amid this seasonally weak demand period to ascertain whether importers are self-sanctioning, buying hand to mouth due to elevated prices, pushing demand into the new crop or a combination of all," J.P. Morgan analysts said in a note.

Amid Black Sea supply disruptions, strong demand pushed India's wheat exports to a record high in the past financial year, traders said.

Risks of further disruption to global grains supply have emerged, with Argentina's major transportation union planning to call for a national strike to demand higher grain freight rates to offset a rise in fuel costs.

CBOT soybeans gained 0.6% to $16.11-3/4 a bushel and CBOT corn firmed by 0.5% to $7.54-1/4 a bushel after the US Department of Agriculture confirmed private sales of 1.084 million tonnes of US corn to China.

It was the biggest US corn sale to China since May 2021, with shipments from Ukraine still disrupted by Russia's invasion.

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