Wheat Prices Jump After Russian Missiles Hit Odessa

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by Tyler Durden
Tuesday, Jul 26, 2022 - 06:45 AM

Wheat prices soared Monday after Russia attacked the Black Sea trade port in Odessa, Ukraine, on Saturday. The strike comes less than one day after Ukraine and Russia brokered an export deal -- mediated by Turkey -- to export millions of tons of grains. 

On Friday, officials from the U.N., Turkey, Russia, and Ukraine signed an agreement to reopen three ports, including Odessa, the country's largest port. It's a move heralded by these officials to alleviate a global food crisis

Kremlin spokesman Dmitry Peskov insisted the weekend missile attack is "in no way related to infrastructure used for the export of grain." 

Meanwhile, Ukraine Infrastructure Minister Vasyl Shkurakov said the deal should come into effect in days and the first shipment later this week. 

Chicago wheat futures jumped 4.6% and traded 1.9% higher as of 1230 ET. Prices slid 10% in the days leading to the signing of the export deal. 

"Wheat futures jumped after Russia struck Odessa's sea port, sparking doubt over its commitment to free Ukrainian grain exports. Moscow said it hit a "military infrastructure facility," Goldman Sach's John Flood wrote in a note Monday. 

Wall Street firms are saying the "attack on last Saturday is raising doubts about the resumption of the port activity in appropriate conditions," Agritel said in a note to clients. 

"The market will inevitably remain very nervous in the event of new bombings or doubts about the concrete implementation of this resumption of export activity," Agritel continued. 

"It is thought to be unlikely that much will move from Ukraine right away as the infrastructure internally and at the ports needs to be rebuilt," Jack Scoville, an analyst at Price Futures Group Inc, wrote. 

Ukraine will press ahead with reopening Odessa as traders monitor grain flows from the port, watching for signs of how quickly volumes come online and determining the next move for wheat prices.