PARIS: Euronext wheat soared to record highs on Thursday as a Russian invasion of Ukraine fueled fears that massive exports through the Black Sea could be curtailed.
Benchmark May wheat futures rose as much as 16%, the biggest-ever intraday gain for Euronext wheat, to set an all-time high for the Paris-based market at 341.75 euros ($381.67) tonne.
It later settled at 315.00 euros, up 7.1%.
Overnight news that Russian forces had begun invading the neighbouring country, deepening a geopolitical standoff between Moscow and the West over Ukraine, sent US wheat futures up by their daily limit.
With no daily limit applying to Euronext, there was a spectacular rise in the European market early on as participants scrambled to cover positions.
“Global markets are adjusting to the potential loss of supply from the Black Sea region following Russia’s invasion of Ukraine, with any major (price) retracement unlikely until a peaceful compromise can be resolved,” British merchant ADM Agriculture said in a note.
News that Ukraine’s military had suspended shipping at its ports and that Russia had closed the Azov Sea to commercial vessels fanned concern about a loss of export supply that could push demand towards alternative sources like the European Union.
Egypt’s cancellation of a wheat import tender, after it received only one offer for French supplies, showed the squeeze on importers.
German traders said some importers had been inquiring about wheat supplies to possibly replace Ukrainian and Russian grain.
“There have been repeated inquires today from importers in several regions but a 25-euro price rise in Euronext means any purchases would be at a painfully high price and would not be done unless really urgently needed,” one trader said.
“The next stage of the story will be if an actual transfer of wheat export business to the EU takes place.” There was also talk that some sales to Algeria that merchants had planned to load in Ukraine would now be sourced along the Black Sea in Romania and Bulgaria.
Euronext maize (corn) and rapeseed futures also surged.
The most active June maize contract on maize futures settled up 3.5% at 274.75 euros a tonne, after earlier setting a life-of-contract high at 300.00 euros.
May rapeseed ended up 3.1% at 763.50 euros a tonne, after earlier jumping to a contract high of 835.75 euros that was near an all-time peak for rapeseed.
Ukraine is the main source of the EU’s maize, rapeseed and sunflower oil imports.
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