Wheat climbs nearer to record as Ukraine supply paralysed

Futures in Chicago jumped by the daily limit for the sixth straight session, rising 7% to US$12.94 (RM54) a bushel, and building on a massive surge of 41% last week, the most in records going back more than six decades.

CHICAGO: Wheat prices surged closer to record levels as Russia’s intensifying war in Ukraine cuts off supplies from one of the world’s leading breadbaskets, and is set to prevent planting of crops this year, dealing what is probably an unprecedented supply shock to global consumers.

Futures in Chicago jumped by the daily limit for the sixth straight session, rising 7% to US$12.94 (RM54) a bushel, and building on a massive surge of 41% last week, the most in records going back more than six decades.

Commodities from energy to metals and crops have soared since Russia’s invasion, fuelling fresh inflationary pressures worldwide.

Wheat prices are now at the highest since the global food crisis in 2008, and look as though they will exceed that level this week. Food costs have already risen to an all-time peak and are set to go even higher, deepening the predicament for importers and pushing more people into hunger.

The war is stalling wheat shipments from one of the world’s most vital growing areas. Ukraine and Russia together account for more than a quarter of global trade of the staple, used in everything from bread to cookies and noodles.

The conflict has closed major ports in Ukraine, and severed logistics and transport links. Trade with Russia has also been stifled by the complexity of navigating sanctions and soaring insurance and freight costs.

Governments are taking steps to safeguard domestic food supplies. — Bloomberg

Hungary is banning grain exports. Argentina, Turkey and Indonesia have also made moves to increase their control over local products.

And Moldova, albeit a small shipper, has temporarily halted exports of wheat, corn and sugar.

Still, there is likely to be a supply response from other growing regions this year. The United States, Canada and Western European countries are likely to plant more in a reaction to the jump in prices, though the increasing volatility of the world’s weather makes bumper crops far from certain. - Bloomberg