Wheat Soars to 14-Year High as Russia Invasion Chokes Trade

Wheat futures in Chicago soared beyond $10 a bushel for the first time since 2008, extending a month-long rise and providing a fresh lift to global food inflation as Russia's invasion of Ukraine halts shipments from one of the world's top growing regions, Bloomberg reported.

Benchmark soft red winter wheat futures soared 7.6% to $10.59 a bushel, breaking the daily limit. The cost of everything from bread to cookies, cakes, and noodles has risen by around 40% in the last month as the price of the grain, a prominent global food staple, has risen by approximately 40%. Corn, which is used for hog feed and sweeteners, rose 2.8 percent intraday to its highest level since 2013.

Russia and Ukraine export more than 25% of world wheat, a fifth of corn, a similar percentage of barley, and 80% of sunflower oil cargoes. The war and the accompanying comprehensive sanctions imposed by the United States and Europe have thrown the grain markets into disarray, with importers scrambling to find supply in other countries.

Since the Russian invasion last week, port operations in Ukraine has come to a halt, and grain trade with Russia has practically been halted. Buyers have been hesitant to take on new business or pay the exorbitant price of chartering and insuring ships to collect cargo. Traders including Bunge Ltd. and Archer-Daniels-Midland Co. have closed their operations in the area.

The battle has provided a further lift to agricultural prices, which were already rising due to scarcity of supply following droughts and labour shortages, and the recent surge may be enough to push global food costs to new highs when the UN releases its latest price index on Thursday.

The Russian invasion suffocates the world's breadbasket.

Breadmakers in the United States are concerned about rising costs as the wheat trade is disrupted.

There may be considerably more suffering ahead. Ukraine's soils are rich and fertile, making it Europe's second-largest country. It is slated to seed the crop in April and May, around the same time as maize, as part of the spring planting campaign, and accounts for around half of all global sunflower oil exports.

With the conflict certain to continue, employees being drafted into the army, and transportation and logistics in disarray, the prospects for sunflower and corn crops are bleak. Furthermore, while the winter wheat crop is still dormant, there must be concerns about how much will be harvested this year.

Drought, labour constraints, and fears of a sunflower oil crisis have pushed up prices for palm and soybean oil, the world's most popular cooking oils. This, too, is fueling global food inflation, threatening to exacerbate the predicament of the poor who rely on these essentials for survival.