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Global grain prices have jumped after Russia bombed a Ukrainian grain port and threatened further destruction upon any cargo ship attempting to leave Ukraine.
Key points:
- Global wheat futures made their biggest one-day jump since Russia invaded Ukraine 17 months ago
- The bombing follows a decision by Russia to renege on allowing the safe passage of Ukraine grain
- Russian and Ukrainian crops make up about a third of the global market
Global wheat futures — an indicator of prices for the coming season — made their biggest one-day jump since Russia invaded Ukraine 17 months ago, prompting fears it would become unaffordable for the world's poorest populations.
Chicago Board of Trade wheat future for September lifted $33 per tonne overnight to the equivalent of $395 per tonne, while international canola futures for November in Canada jumped $15 to $994 per tonne.
Earlier this week, Russia refused to extend a UN-brokered deal, which had been in place for the past year, allowing vital shipments of grain to leave Ukraine's Odesa ports for international markets, including North Africa and the Middle East.
It was reported Russia bombed the Odesa port on Thursday, destroying grain loading infrastructure and about 60,000 tonnes of grain stored at the port.
Russian has also warned that any ships sailing near Ukrainian ports would be "regarded as potential carriers of military cargo."
Prices rising
Episode 3 grains analyst Andrew Whitelaw told the Victorian ABC Country Hour that Russia had threatened to renege on the grain deal before, but the latest bombings really spooked the market, which was now concerned about grain supply.
"They're basically showing that no deal means no deal," he said.
"We've seen wheat futures rising by about $33 a tonne, and that's probably the biggest rise since the start of the [Ukraine] invasion."
Prior to the war, Ukraine was the largest exporter of sunflower oil, the fourth largest exporter of barley and corn, and the fifth largest exporter of wheat, according to United Nations data for 2020.
Mr Whitelaw said, collectively, Russian and Ukrainian crops made up a very large percentage of grain available for export, which was sold all over the world, including to poor countries.
"So [with] some of these commodities, they make up around about a third of the global trade. We're talking about huge volumes," he said.
"And that is a big concern for those developing nations that rely on grains for their daily diet."
Mr Whitelaw said without the port, Ukraine would struggle to get its grain out of the country.
"They've been able to export into Europe overland through the western parts of Ukraine by rail and by truck," he said.
"But that's caused its own problems because those Eastern European countries are getting flooded with cheap Ukrainian grain and have asked for a continual ban on Ukrainian grain."
Mr Whitelaw said the full price rise might not be fully passed onto Australian markets "because it could be a very short-term rise."
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