The worsening situation in the conflict between Russia and Ukraine is fuelling the upward price movement in the futures market in Chicago and Paris.
The first-expiring wheat contract on the Chicago futures market rose 6% on Tuesday, Feb. 22 from the previous trading day. On Monday, February 21, US markets were closed in observance of President’s Day. The corn quotation (May 2022) rose by 3% in Chicago. More corn has been sold from the United States than previously expected.
Russia and Ukraine account for 29% of all wheat exports in the world. Countries in Africa and the Middle East need that wheat. According to experts, a further escalation of the situation could lead to far-reaching upheavals in the global wheat market. As a result, the demand for US wheat as an alternative to Russian and Ukrainian products is likely to increase sharply. The United States Department of Agriculture (USDA) reported early this week that Nigeria has purchased 120,000 tons of American hard red winter wheat.
Not only American wheat and maize will become more attractive if sales in the Black Sea region decline. European wheat is also becoming more interesting, resulting in higher prices. The most traded May contract on the futures market in Paris rose to €284.50 per tonne on Tuesday, February 22. That is the same level as was achieved at the end of December.
Russian leader Putin remains unpredictable. All eyes in the grain market are currently on the threat of war between Ukraine and Russia, pushing other matters into the background.