The Russians attacked the Danube port of Reni with 15 Iranian drones on the night of 24 July, damaging three grain warehouses, causing fires and halting grain receipts and shipments. The exchanges reacted with a price increase of 7-8.6%. According to preliminary data, several Romanian barges were also damaged, prompting shipowners to move some of their fleet to the Romanian port of Galati, 26 km from Reni. An escalation of the naval war will reduce the number of ships venturing into the region and increase freight costs amid heightened risks.
There are currently 30 ships queuing to enter the Danube, so a shortage of supply could cause purchase prices in Ukraine to fall.
Ukraine can respond to a new phase of the war by attacking ports and shipping with a mirror attack on Russian ports. This will lead to an increase in world grain prices.
As with last year’s gas blackmail, the Russian Federation is now threatening the world with a food crisis, provoking a rise in world wheat prices in order to sell its own harvest at the most profitable price.
Yesterday, September futures rose
| soft winter SRW wheat in Chicago | by 8.6% to $278.3/t |
| hard winter HRW wheat in Kansas City | by 6.8% to $337.5/t |
| hard spring HRS wheat in Minneapolis | by 5.5% to $343.9/t |
| Black Sea wheat in Chicago | by 2.6% to $243.25/t |
| Wheat on the Paris Euronext | by 7% to €264.75/t or $293.9/t |
As of 24 July, Ukraine’s wheat exports for fiscal year 2023/24 were 563,000 tonnes, which is significantly higher than 325,000 tonnes on this date last year. However, it should be remembered that the Grain Corridor became operational on 25 July 2022, which significantly increased exports.
In the US, 68% of the winter wheat area was harvested by 23 July (77% last year and 87% 5-year average), and the number of spring wheat crops in good or excellent condition for the week fell from 51% to 49%.
Wheat exported from the USA in the period 14-20 July fell by 24% compared with the previous week to 358.8 thousand tonnes, and total for the season amounted to 2.153 million tonnes compared with 2.592 million tonnes last year.
Russia is now preparing a provocation
The US State Department has warned that the Russian Federation, after withdrawing from the grain agreement and attacking Odesa and the Danube ports, is now preparing a provocation under a foreign flag in the Black Sea. An attack by its own or foreign civilian ships in the international waters of the Black Sea will lead to a further increase in wheat prices.
Source: Graintrade