(BFM Bourse) – The price of futures contracts on the Chicago Stock Exchange is moving up sharply after Moscow withdrew from a vital agreement for Ukrainian grain exports. This decision is expected to cause significant volatility in the market.
Agricultural raw materials are obviously not immune to the turmoil caused by the Ukrainian conflict. The prices of the futures contract for December on wheat on the Chicago Stock Exchange thus jumped by more than 6% around 11 a.m. On the Paris Stock Exchange, the price of milling wheat of the same maturity rose by nearly 4%.
This increase is caused by Russia’s decision to suspend the agreement on grain exports from Ukrainian ports, which are vital for the world’s food supply. Moscow took the move after a drone attack targeting its ships in annexed Crimea, which Moscow blamed on Ukraine and Britain.
This cereal agreement, concluded on July 22 under the aegis of the UN and Turkey, had made it possible to unblock millions of tonnes of cereals stuck in Ukrainian ports since the start of the conflict in February.
“Since the agreement at the end of July, 9 million tonnes of grain have been shipped from Ukrainian ports”, underlines the specialized firm Agritel in a note published on Monday. This agreement established a secure maritime corridor to facilitate shipments of Ukrainian agricultural products for a period of 120 days.
Seventh world exporter
“The announcement of the suspension of the agreement on the export corridor for grain from Ukraine will generate unprecedented volatility on the markets, with the key to a significant rise in prices at the start of the week”, continues Agritel. “It will nevertheless be necessary to follow closely whether or not negotiations resume with Russia in the coming days, because the geopolitical elements are difficult to predict”, adds the cabinet.
After this weekend’s announcements, UBS analysts raised their price forecast for wheat from $8.25 a bushel to $9.5 a bushel as of March 31, and $8 a bushel at $9 a bushel as of June 30.
According to the US Department of Agriculture, Ukraine is the world’s seventh-largest wheat exporter, accounting for about 4.3% of global production. Its exports reach a total value of 5.1 billion euros.
Julien Marion with AFP
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