Wheat futures in Chicago and Paris trade sharply higher after the Russia news - which broke yesterday - was followed up by today’s announcement from Putin. The referendum and annexation of the Russia controlled areas would likely further increase tensions with Europe and the US while casting more doubts over grain supplies from the Black Sea area, especially the UN sponsored export corridor from Ukraine which recently has helped ease supply worries for wheat and sunflower oils.
The Ukraine wheat export reached 883,000 tons in August but remains well below the 3.65 million tons that was shipped last year, and the long-term average around 3.1 million tons. September is normally the busiest month for Ukraine exports with an average 3.3 million tons having been shipped in recent years. However, with plenty of grains still left in silos, albeit from a much-reduced war impacted harvest, an escalation in tensions could impact the ability to ship wheat to a global market worried about supply ahead of the northern hemisphere winter and a triple dip La Nina potentially causing problems for producers on the southern hemisphere, especially Australia.
Paris Milling wheat for December delivery trades above resistance-turned-support at €340 per tons with the next upside level of interest around €353 per tons.