President Donald Trump said on the campaign trail he would end the war in Ukraine — and this week, he stated negotiations would start “immediately.”
The news came after President Trump held what he called a “lengthy and highly productive” phone call with Russian President Vladimir Putin Wednesday morning.
Then, later in the week, Ukrainian President Volodymr Zelensky met face-to-face with Vice President JD Vance for highly anticipated talks at the Munich Security Conference, where Zelensky urged the United States “not to make any decisions about Ukraine without Ukraine.”
Zelensky also said he would only meet in person with Putin if a common plan is negotiated with President Trump first. Zelenskyy also said he believes Trump is the key to ending the Russia-Ukraine conflict.
As negotiations appear to be taking shape, the conflict in Ukraine has also been in focus for certain markets since Russia first invaded Ukraine nearly three years ago. The initial invasion sent wheat prices soaring.
So, it begs the question: is there a war premium built into the markets today? According to Joe Vaclavik of Standard Grain, the answer is simply, “no.”
“There’s no war premium, not in my opinion. You take a look at a wheat chart and go back to 2022 when prices spiked on the initial invasion. We’ve done nothing but trade lower in wheat for more than two years. It’s been a downtrend, a multiple year downtrend while the war was going on,” says Vaclavik.
Vaclavik points out wheat prices have seen strength lately and are basically back to pre-Covid levels.
“Why would I believe now that an end to the war is bearish when the price action has been nothing but bearish as the war has gone on for the last two years? I just don’t buy into that,” says Vilsack.
Chip Nellinger of Blue Reef Agri-Marketing agrees with Vaclavik, saying even if the war gets resolved, it doesn’t necessarily mean the situation in Ukraine will immediately turn back to normal.
“That winter wheat crop is in the ground already and struggling with dry weather over there. They’ve got cold temperatures. And so it is what it is on the wheat side,” says Nellinger.
Nellinger adds the wheat chart has turned more friendly, with wheat prices posting multi-year highs.
“Looks to me like the funds are about set to come out of their short position. You have more bullish fundamentals now than we’ve had in quite some time. So maybe a year out, 2026 or 2027, things start to get back to normal in Ukraine, but right now it is where it is and they’re not going to just magically produce record amounts of grain just with a peace agreement here over the next couple of weeks.”
