Russian attacks push wheat prices up

The rising tensions in the Black Sea region are giving the wheat market a strong boost. New attacks on Ukrainian grain infrastructure and shipping are fuelling concerns about exports, while Russia is looking for alternative routes and wants to support domestic prices with intervention. Meanwhile, the US corn and soybean harvests and winter wheat sowing are progressing more slowly than average.The December contract for wheat closed the last trading session €4.25 higher at €245.75 per tonne. Wheat also moved up on the CBoT and closed 9¼ cents higher at $6.92¼ per bushel. Corn lost half a cent, bringing it to $4.97¼ per bushel. Soybeans gained 2½ cents to $12.80¾ per bushel.The unrest in the Black Sea region is pushing the wheat price up. The Kremlin is stepping up the attacks on Ukraine. In addition to an attack on a bridge in Kiev, Russia has also carried out new attacks on the infrastructure around the ports of Odessa. A ship loaded with grain was sunk in the process, various media report. In response to Russian aggression, Ukrainian President Zelensky has announced that attacks on refineries in Russia will be stepped up.Attack near RomaniaA grain ship was attacked in the territorial waters of Romania, probably by Russia, Reuters and other media report. According to various sources, it involved a drone attack. Two people on board were killed and eleven were rescued by the Romanian coast guard. The ship departed on 18 September from the Ukrainian port of Izmail and was said to be en route to Italy. Romania is a member of Nato and the fact that a ship was attacked in Romanian territorial waters is being called worrying by various analysts.Meanwhile, Russian Agriculture Minister Oksana Lut is convinced that the country can simply meet its grain export obligations for this season. There is no doubt that Russia will meet all its obligations, Lut tells the Russian news agency Interfax. About 80% of Russian exports normally go through the Black Sea and the Sea of Azov. Due to the attacks in that area, Russia is forced to use other routes for exports, such as via the Baltic Sea, ports in the Far East and via land borders. According to figures from Rusagrotrans, Russia exported 6.8 million tonnes of wheat this season up to and including September, compared with 11.3 million tonnes in the same period last year. About 60% was exported via ports on the Baltic Sea.InterventionVarious Russian sources, including TASS and RIA, report that Russia wants to start an intervention programme at the end of October to support domestic wheat prices. Due to a lack of export opportunities, Russian farm-gate prices are under severe pressure. The Russian Ministry of Agriculture therefore wants to buy 3 million tonnes of wheat. According to some analysts, this will have little effect. A similar intervention programme was introduced in the 2014/15 season in response to low prices, with the state purchasing 12 million tonnes of wheat. In the 2020/21 season there was an intervention programme for about 8 million tonnes. This season, various analysts expect Russia to be able to export 14 to 20 million tonnes less wheat. The intervention programme would only absorb about 15% to 20%.Slow harvestIn the US, the corn harvest is slightly behind the five-year average, according to the new Crop Progress report from the USDA. 23% of the corn acreage has been harvested, compared with 27% in the five-year average. No figures are available from last year because the USDA did not collect data then due to the shutdown. The soybean harvest is also slightly behind. A quarter of the acreage has been harvested, compared with 33% in the five-year average. There are various reports about corn yields. In some states, yields are average or good, while in others they are below average. The USDA rates 54% of the corn acreage good or excellent. That is the lowest percentage of this season.Winter wheat sowing in the US is also progressing at a somewhat slower pace. 36% of the planned acreage has been sown, compared with 46% in the five-year average. So far, 16% of the winter wheat crop has emerged. The five-year average for this week is 20%.