PARIS: Euronext wheat climbed more than 5percent on Friday to a seven-week high as rumours about a closure of the Sea of Azov to shipping sparked concern about disruption to exports from Russia, the world’s biggest wheat supplier, traders said.
September milling wheat on Paris-based Euronext settled 5.5percent up at €216.25 a metric ton, after reaching its highest since May 21 at €216.75. Chicago Board of Trade wheat also rallied to a seven-week peak, though it pared gains after a closely watched US Department of Agriculture supply-and-demand report reduced US wheat supply by less than anticipated.
Ukraine has struck a number of Russian tankers in the Sea of Azov that connects with the Black Sea, and traders said there was talk in the market about a possible closure by Russia of Azov to all shipping. “It’s the reason for the rally on Matif (Euronext) and CBOT,” a futures trader said, noting that the risk to a route that accounts for millions of tons of Russian wheat exports unsettled investors. Two grain export industry sources later said that Russia temporarily stopped shipping through the Don-Azov channel, which links the Don River with the Sea of Azov, following a Ukrainian attack on Russian vessels.
Russia’s Agriculture Ministry did not immediately respond to a Reuters request for comment.
MORE WEATHER STRESS FOR EU MAIZE
The idea of disruption to Russian exports caught off guard market participants who had been focused on forecasts of large harvests this summer in Russia and elsewhere in the Black Sea export region. Favourable crop conditions in the Black Sea zone have tempered reaction to recent torrid weather in Western Europe.
Grain trade association Coceral cut its outlook for this year’s soft wheat production in the European Union and Britain in a special update following extreme heat in Europe, though like other forecasters it made a steeper cut to its maize harvest estimate.
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