The latest attacks on ports, ships and grain terminals in the Black Sea are disrupting exports from Russia and Ukraine, two of the world’s biggest wheat suppliers. That is pushing wheat prices higher and raising concerns about another global food-price shock.
Wheat prices are climbing sharply as the war between Russia and Ukraine increasingly disrupts the movement of grain through the Black Sea, one of the world's most important agricultural trade routes.
Benchmark wheat futures have risen to near three-year highs as traders assess the impact of attacks on ports, vessels and grain terminals on both sides of the conflict. Reuters reported on Thursday that Chicago wheat futures had risen more than 17 per cent since early July as buyers grew increasingly concerned about supply disruptions.
August is a peak period for shipping newly harvested grain to global buyers. Any prolonged disruption at this stage could tighten supplies just as countries are looking to replenish stocks.
Why the Black Sea matters
Russia and Ukraine are major suppliers of wheat and other agricultural commodities to the world.
Together, they account for roughly 30 per cent of global wheat exports, according to estimates cited by Oxford Economics. The two countries are also important suppliers of barley, corn and sunflower oil.
That makes the Black Sea a critical trade route for global food markets.
But attacks have increasingly disrupted shipping from both countries.
Russia has targeted Ukrainian ports and vessels, while Ukraine has stepped up attacks on Russian ships and export infrastructure. Recent attacks have hit Ukraine's ports around Odesa as well as Russia's major grain-exporting facilities at Novorossiysk. Reuters has reported that a growing number of vessels, terminals and export facilities are being affected.
The result is a supply problem that is not necessarily about a lack of wheat in the fields. Instead, the growing challenge is getting the grain from farms to international buyers.
Ukraine's exports take a hit
Ukraine has been particularly badly affected because its agricultural sector depends heavily on access to ports.
Its major Black Sea ports, including Odesa, Chornomorsk and Pivdennyi, have historically handled most of the country's agricultural exports. Attacks have sharply reduced shipping activity.
Ukraine's grain exports have fallen by roughly three-quarters this month, according to data cited in recent reports. Reuters reported that the country's exports had dropped by about 76 per cent year-on-year in August amid the effective disruption of Black Sea shipping.
