Alleged Kremlin attack heightens uncertainty over Black Sea grain export corridor renewal

03-May-2023 - Last updated on 03-May-2023 at 18:51 GMT

Wheat futures staged their biggest rally in six months after an alleged attack on the Kremlin heightened Russia-Ukraine tensions, stoking doubts over the renewal of the Black Sea grain export deal, warned CRM Agri.

“Chicago wheat futures for July-23 stood 4% higher in late morning deals, recording the contract’s largest intraday headway since late October."

The rebound followed an official statement from Russia that it had shot down two drones Ukrainian drones, which it claimed had attacked the Kremlin, reported the UK analysts.

The Russian statement described the incident as a “planned terrorist attack and attempted assassination” of Russia’s president, Vladimir Putin, ahead of next Tuesday’s Victory Day parade in Red Square, adding that “Russia reserves the right to take retaliatory measures where and when it sees fit.”

Black Sea grain corridor

That Russian announcement comes amid talks over the rollover of the Black Sea export corridor, which ensures safe grain exports from three Ukrainian ports, an agreement which already looked more problematic than previous renewals, noted the CRM Agri report.

European wheat contracts recovered from multi-month lows as well, although gains were trimmed by gains in both the euro and sterling against the dollar, which fell by 0.6% against a basket of currencies amid a growing threat of a US default, commented the grain specialists.

Corn

The rally in wheat also fostered a recovery in Chicago corn futures from 14-month lows, with weekly US ethanol data offering support as well.

“Ethanol output rose by 9K barrels per day to 976K barrels per day, defying market expectations of a production decline, while stocks shrank by 943K barrels, compared with forecasts of a 117K-barrel expansion,” said the CRM Agri team.

Oilseeds

“However, Chicago soybean futures for July-23 eased by 0.2%, weighed in part by cross-commodity selling by funds which have retained a net long position in the oilseed, even while expanding short positions in corn and wheat.

“Paris rapeseed futures for August-23 also slipped back, by 1.0%, feeling pressure from a further slide by oil markets, attributed to concerns over both the Chinese and US economies.”