Wheat futures are continuing to move higher again Thursday morning, after Chicago contracts surged their daily limit Wednesday as escalating Russia-Ukraine tensions renewed fears about disruption to Black Sea grain exports.
The December Chicago wheat contract jumped the 45-cent daily limit Wednesday to settle at $7.48 ¼, its highest level in more than three years. Kansas City wheat gained as much as 38 cents, while Hard Red Spring and Minneapolis spring wheat also posted strong advances.
The rally accelerated following reports Russia is considering stepping up ballistic missile attacks on Kyiv and critical Ukrainian infrastructure after concluding peace negotiations have reached a dead end. The news added another layer of risk to an already disrupted Black Sea export system.
Recent retaliatory attacks by Russia and Ukraine have damaged port and grain infrastructure and sharply curtailed loadings from the region. Russia has also rejected a proposed ceasefire covering grain vessels unless broader conditions are met, keeping uncertainty elevated around exports from two of the world’s most important wheat suppliers.
Fund buying and short covering helped amplify Wednesday’s move, while concerns about adverse weather in other producing regions have added support.
Despite the dramatic rally, wheat remains far below the levels reached immediately after Russia invaded Ukraine in February 2022 (see chart below. Chicago wheat ultimately spiked above $14/bu in March 2022, nearly double current values, as the invasion initially threatened to shut a massive volume of Black Sea grain out of world markets.
December Chicago wheat: source - Barchart
