Wheat quotes in Europe and the US rose in the third week of January 2022 as political tensions between Russia and Ukraine continue. Both Russia and Ukraine are major exporters of wheat. Talk of a military clash between the countries has influenced the upward trend in wheat prices, which were previously falling since the southern hemisphere crop entered the market. The US wheat price on the Chicago Board of Trade (CBOT) reached USD 293.6/MT, and the Euronext wheat increased to EUR 273/MT, up by 7.3% and 4.4%, respectively, over the last three days to 19th January.
According to the United States Department of Agriculture (USDA), 2021/22 MY global wheat ending stocks held by all major exporting countries is estimated to be the lowest since the 2007/08 season, down by 4% from the previous season. Consequently, any disruptions from Russia and Ukraine could limit the market’s ability to access around 29% (Russia and Ukraine combined) of wheat supplies. The escalation of the conflict could not only lead to interruptions in grain trade but also for natural gas and Brent crude supplies. The price rise in natural gas and Brent crude oil has already exerted inflationary pressure across many commodities and the ongoing conflict could exacerbate the price increases.