image image image

Russia related commodities pop on Putin threat

Ole Hansen

Head of Commodity Strategy

Summary:  Commodities depending on supply from Russia and the Black Sea has risen strongly during the past 24 hours after Putin announced plans to step up its war in Ukraine. European natural gas prices trade back above 200 euro per MWh with the cost of diesel also receiving a bid. Equally concerning is a fresh spike in wheat prices at the exchanges in Chicago and Paris with traders worrying the UN supported export corridor from Ukraine could be at risk, thereby lowering supply to a global market already concerned about the availability of high protein wheat

An increasingly desperate and with that an increasingly dangerous President of Russia has ordered the mobilization of reservist troops to ‘protect’ Russia’s territorial integrity. A territory which Putin would like to see include the self-proclaimed republics of Luhansk and Donetsk, and the Moscow-controlled regions of Zaporizhzhia and Kherson, where people in the coming days will vote on whether to become part of Russia.

The news and threat of escalating the war send the Moscow MICEX index down by more than 10% and weakened the euro, the latter already under some nervous pressure ahead of today’s expected 75-100 basis point rate hike from the US Federal Reserve. Commodities depending on supply from Russia and the Black Sea region have responded by trading higher with particular focus on gas, diesel and not least wheat.

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.

Source: Saxo Group

European TTF benchmark gas trades back above €200 per MWh after touching a €170/MWh low on Tuesday as the market worry Russia may further reduce gas flows on the two remaining pipelines still open. Especially the Ukraine transit via Sudzha which is currently proving around half the 80 mcm/day currently being sent to Europe, down 290 mcm/day from the same time last year.

Diesel futures and refinery margins (red lines below) in New York and Europe also responding with strong gains with low inventory levels on either side of the Atlantic potentially being challenged more by the EU embargo which undoubtedly given the latest developments will go ahead from February next year.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.