Wheat surges to two-year high after Russia curbs Novorossiysk port traffic

Chicago wheat futures have rallied sharply this week, with prices climbing above $7.00 a bushel for the first time in two years, as escalating attacks on grain vessels and port infrastructure across the Black Sea region throttled exports from the world's two largest wheat suppliers.

Novorossiysk Nighttime Ban Rattles Markets

Russia introduced a temporary ban on vessel movements into and out of Novorossiysk — its largest grain export port — between midnight and 5:00 a.m. following Ukrainian drone attacks, according to three grain industry sources cited by Reuters ↘ 5.12% on July 22. The order was issued verbally, with no official documents published. Novorossiysk handles a substantial share of Russia's seaborne grain exports, roughly 90% of which flow through southern Black Sea ports.RBC-Ukraine+4

The restriction added to disruptions already roiling the region. Russia had begun rerouting grain shipments from the Sea of Azov after Ukrainian drone strikes hit multiple commercial vessels there in early July, suspending traffic through the Kerch Strait. Ukraine, meanwhile, saw shipowners pull back from calling at its Black Sea ports after Russian missile strikes targeted Odesa-region infrastructure, with the country losing an estimated third of its export capacity, according to the Financial Times, as cited by Ukrainian media.Reuters+1

Prices Hit Levels Not Seen Since 2024

CBOT CME Group Inc. ↗ 1.79% September soft red winter wheat jumped roughly 28 cents on July 22 to around $7.06 a bushel, while Kansas City hard red winter wheat gained about 31 cents to $7.64 a bushel. On Paris-based Euronext, benchmark milling wheat futures climbed 4.4% to €245 per ton, and corn prices rose to their highest since April 2023. The rally extended gains that began after Russia and Ukraine exchanged strikes on each other's grain export gateways starting around July 10.MGN.com+4

"This move feels less like a weather market and more like the early days of the 2022 invasion," said Mike Zuzolo of Global Commodity Analytics, noting a near-98% correlation between wheat and crude oil prices during the current rally.youtube

Tightening Supplies Add Fuel

The shipping disruptions come at a precarious moment for global wheat markets. Russia and Ukraine together account for more than a quarter of world wheat exports, and both countries' export infrastructure is being degraded simultaneously. European grain production is projected to fall more than 9% from last year, the steepest decline in two decades, as heat waves damage crops across the continent. In the United States, the North Dakota Crop Tour reported spring wheat yields averaging 45.9 bushels per acre, nearly four bushels below last year's level.EIR News+3

French and Romanian wheat prices have climbed $16–19 per ton over the past week, while U.S. wheat has gained roughly $12 per ton, according to UkrAgroConsult. With global wheat stocks-to-use ratios tightening toward levels last seen in 2013, traders see few signs of relief as long as Black Sea hostilities persist.Ukragroconsult+1