Wheat prices were surging on reports that 60,000 tons of grain were destroyed in a Russian missile attack on Odesa Oblast.
Wheat futures surged 7.8%, their largest gain since Feb. 28, 2022, after Ukrainian Agriculture Minister Mykola Solsky put a number to how much wheat had been destroyed in Russian attacks, according to reports from the Kyiv Independent.
The gains come as wheat prices were already getting a lift from Russia’s decision to pull out of a deal that allowed Ukraine to export grain. Wheat prices had already risen 5.5% since July 13 as markets started to price in the potential impact.
But losing actual wheat is far different than the potential impact of an ended deal. The markets have shown a remarkable ability to adjust to restrictions on Russian oil, and likely would have found a way to get Ukraine wheat to end markets. But destroyed wheat can’t be replaced. Higher wheat prices could ultimately translate into higher food prices, and cause inflation to rise…
…just as markets are expecting it to come under control.
Write to Ben Levisohn at [email protected]
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