Wheat climbed the most in 17 months and corn rose to the highest since September as tensions escalated in Ukraine, a leading exporter of both grains.
Ukraine, set to be the third-largest corn shipper this year, mobilized its army reserves as Russia seized control of the eastern European country’s Black Sea region of Crimea, intensifying one of the most serious standoffs with the U.S. since the end of the Cold War. Ukraine will probably export 9.5 million metric tons of wheat this season from 7.1 million tons in 2012-13, making it the sixth-biggest supplier, according to the International Grains Council.
"Mounting unrest between Ukraine and Russia is supporting global grain prices," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report today. "The Black Sea region’s importance to global grain production and exports has surged in recent years."
Wheat for May delivery jumped as much as 5.9 percent to $6.38 a bushel on the Chicago Board of Trade, the biggest intraday gain for a most active contract since Sept. 28, 2012, and the highest level since Dec. 12. It traded recently at $6.2925. Corn for delivery the same month climbed as much as 4.2 percent to $4.8275 a bushel, the highest since Sept. 3, before trading at $4.74.
Ukraine was the fourth-largest corn exporter in 2012-13, behind Brazil, the U.S. and Argentina, IGC data show. The country may leapfrog Argentina this year, shipping 18.3 million tons through June from 13.6 million tons a year earlier, according to the IGC. That compares with forecasts for 35.5 million tons from the U.S. and 24 million tons from Brazil.
"I do see notable risks here," said Jaime Nolan-Miralles, a commodity risk analyst at INTL FCStone Inc. in Dublin. "It is already firming up cash-market prices in Europe and raises notable questions for grains-flow potential out of the Black Sea."
Corn prices in Ukraine are rising as farmers slow sales, holding grain as a hedge against depreciating currency, the U.S. Grains Council said last week. While exports from Odessa and other Black Sea ports are continuing and vessels are being loaded, price increases may slow down future sales, it said.
Milling wheat for November delivery traded on NYSE Liffe in Paris gained 3.2 percent to 194.50 euros ($267.94) a ton, earlier climbing as much as 4 percent, the biggest jump for a most-active contract since July 2012. Milling wheat for nearby May delivery rose 3.6 percent, earlier gaining as much as 4.6 percent.
Ukraine still has about 4 million tons of corn and 2.5 million tons of wheat to ship as part of its 2013-14 export campaign, according to Olivier Bouillet, manager of the Kiev office of Paris-based farm adviser Agritel SA.