Wheat Climbs as Ukraine Tensions Boost Supply Disruption Concern

April 14, 2014 04:04 AM
Wheat Climbs as Ukraine Tensions Boost Supply Disruption Concern

Wheat rose for the first time in four sessions in Chicago on concern that supply from the Black Sea region will be disrupted after clashes intensified in eastern Ukraine amid increasing tension with Russia.

At least one serviceman died during the weekend in eastern Ukraine, where armed separatists ignored a deadline to free official buildings they’ve occupied. Crisis talks with Russia, the U.S. and the European Union are planned for April 17, as a United Nations Security Council meeting last night left the U.S. and Russia trading blame for the unrest. The EU is weighing expanding sanctions on Russia, the fifth-biggest wheat exporter, followed by Ukraine, U.S. Department of Agriculture data show.

"Wheat price action is being led by continued violence in eastern Ukraine," Matt Ammermann, a risk management consultant at INTL FCStone in London, said in an e-mailed report. Dry weather in the U.S. Great Plains also is contributing to the rally, as "rains missed the dry hard, red winter wheat areas over the weekend," he said.

Wheat for July delivery rose 2.2 percent to $6.83 a bushel at 7:38 a.m. on the Chicago Board of Trade, heading for the biggest increase since March 24. Prices earlier jumped as much as 4.3 percent to $6.9725, the highest since April 1. In Paris, milling wheat for November delivery added 1.2 percent to 203 euros ($280.40) a metric ton on NYSE Liffe.

Combined wheat exports from Russia and Ukraine are pegged at 27 million tons for the 2013-14 season, set to account for about 17 percent of global shipments this year, USDA data show. The two countries also are the world’s top shippers of sunflower oil and Ukraine is the third-biggest exporter of corn.


Rain Deficit


In the U.S., the largest wheat exporter, growing areas in the Plains had as little as 25 percent of the normal amount of rain in the past month, National Weather Service data show. The USDA is scheduled to update its weekly report on crop conditions later today. Last week the agency said only 35 percent of winter crops in the main U.S. growing areas were in good or excellent condition, down from 62 percent estimated in November.

Corn for July delivery rose 0.8 percent to $5.085 a bushel in Chicago. Soybeans for the same delivery month advanced 0.5 percent to $14.545 a bushel.


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