Wheat reaches 14-year high over supply crunch in Black Sea region

BY: ONOME AMUGE

Wheat futures surged to a 14-year high on Thursday on the Chicago Board of Trade (CBOT), as the crisis between major exporters Russia and Ukraine continued to raise worries about the global supply of the commodity.

Wheat futures on the CBOT jumped 7.62 percent to $10.59 per bushel, its highest valuation since 2008.

Analysts attributed the multi-year high valuation to the persistent shoot-out between Russian and Ukrainian troops, noting that the situation has led to the blockage of the Black Sea ports used by both countries to export grain, with international shippers forced to seek wheat purchase from other markets.

With Russia and Ukraine accounting for about 30 percent of the global wheat exports, market dealers have expressed concerns that prices of the grain commodity used in the production of flour and confectioneries could soar much higher if both countries fail to reach a ceasefire agreement.

Reports that Ukraine has suffered damage to its ports and other export facilities orchestrated by Russian troops, while Western sanctions have hit Russian supplies, have further lent support to wheat prices.

Corn and soybean oil futures prices were also impacted by the geo-political prices, with both grains jumping higher into bullish territories as May corn gained 2.2 percent to $7.40 a bushel, while soybean was up 1.5 percent to $16.88 a bushel.

In his remarks on the soaring grain commodities, Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia said: “ The world is full of possibilities at present. And one of those possibilities is that, somehow, Ukraine and Russia harvests cannot be exported.”

This, Gorey explained, is an indication that grain commodities will continue to trade higher.

In its attempt to counter supply restrictions from Russia and Ukraine, the European Union said it will consider letting farmers use fallow land, notably to grow protein crops for livestock feed.