- The Washington Times - Thursday, February 24, 2022

Energy and stock market traders are not the only ones watching Russia‘s invasion of Ukraine with mounting alarm.

Wheat futures prices were up sharply Thursday on the prospect of disrupted supplies and market breakdowns as two of the world’s biggest grain exporters square off.

Between them, Ukraine and Russia account for nearly a third of the world’s wheat exports, according to the U.S. Department of Agriculture, and Kyiv is a major source of grain for such key markets as China, Egypt and much of the Middle East.

Wheat and soybean prices were at their highest prices in a decade.

Wheat futures contracts for the spring months were up sharply on commodity markets in Chicago and Minneapolis on Thursday, with May future contract prices for Soft Red Winter wheat up 48 cents to $9.32 a bushel, according to S&P Global Platts.

Prices were also up in early trading on European markets as grain traders adjusted to the news.

“With the tensions escalating in the region, traders believe that the prices of wheat from Ukraine are seen to remain weak in the coming weeks,” the business news website reported.

“For Russia, too, prices are likely to remain volatile during the next few weeks as buyers were uncertain about the trade prospects in the region.”

Russia and Ukraine combined account for 29% of global wheat exports, 19% of world corn supplies, and 80% of world sunflower oil exports, according to a CNBC report.

An analysis earlier this week by the Netherlands-based Rabobank Group said expected sanctions on Russia after an invasion could block sales of already harvested grain, while the fighting would disrupt trade routes through the Black Sea.

The longer-term damage to Ukraine‘s vast agricultural sector is harder to assess but could be significant.

“It really could mean sharp declines in wheat production, a real fall in wheat exports as farmers flee the fighting, infrastructure and equipment are destroyed,” Per Hong, a partner with the consulting firm A.T. Kearney, told the NPR program “Marketplace” earlier this week.

And there were signs that grain — like oil — could become a geopolitical weapon: China’s customs agency has formally approved imports of wheat from Russia, following up on a Feb. 8 deal announced shortly after Mr. Putin was in China for talks with President Xi Jinping and to attend the Beijing Winter Olympics.

Analysts say Beijing could provide a vital economic lifeline for Mr. Putin if a barrage of announced and looming sanctions from the U.S. and its allies shut Russia off from lucrative Western markets.

• David R. Sands can be reached at dsands@washingtontimes.com.

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