(Bloomberg) — Wheat futures climbed as much as 6.9% after Russian President Vladimir Putin criticized a recent grain deal with Ukraine, heightening attention on the sales outlook from the Black Sea region.
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The grain shipment corridor from Ukraine is not helping poorer countries, as the majority of supplies are going to Europe, Putin said during the Vladivostok Economic Forum. It may be worth discussing restrictions on the routes with Turkish President Recep Tayyip Erdogan, he added.
The export deal, forged in July, was brokered by Turkey and the United Nations. It’s valid for an initial 120 days, and markets remain sensitive to any signals from politicians on its future. Ukraine is one of the world’s top crop shippers and the resumption of flows from its Black Sea ports has helped ease global grain costs, although much hinges on whether the pace holds.
Russia, as well as poor countries, were deceived, even though “we have done everything to reach these agreements, we adhere to them and ensure them,” Putin said.
Russia is struggling to export its own bumper wheat harvest. Shipments in July and August fell 22% versus a year earlier, despite a bigger crop. Food sales have been exempted from western sanctions, although some banks and shippers remain wary of doing business there.
“Putin has no interest in seeing Ukraine benefit from large grain sales at a time when sales from his own country are sluggish following a big crop,” said Arlan Suderman, chief commodities economist at US-based StoneX.
A senior US State Department official said Wednesday that the administration’s efforts to ensure global food security are beginning to see results and Ukrainian output had nearly returned to prewar levels. The official, who briefed reporters on condition of anonymity, said Putin’s comments may be an effort to divide the world and rally poorer nations to press for the war to end on Russia’s terms.
Ukrainian officials also pushed back against Putin’s claims. Foreign Minister Dmytro Kuleba said two-thirds of Ukrainian grain being sent as part of the initiative is going to consumers in Asia, Africa and the Middle East.
“Just now, another vessel with Ukrainian grain has reached the shores of Africa near Sudan,” Kuleba said. He said the recovery of Ukrainian food exports had reduced food prices and cut the risk of a food crisis.
More than 2 million tons of grain and other foodstuffs were shipped from Ukrainian ports since early August, according to data posted by the UN. That includes recent cargoes to Turkey, Spain, China, Italy and Somalia.
A spokesperson for the UN secretary-general last month said the corridor is helping to restrain world food prices, which had soared after the outbreak of the war. That would benefit all commercial buyers. The first wave of ships to depart had been stuck at the port for months and headed to destinations contracted before the invasion.
Mykhailo Podolyak, an adviser to Ukraine’s president, told Reuters on Wednesday that Russia has no grounds to review the Ukraine grain-export deal and the terms of the agreement were being observed.
After earlier climbing nearly 7%, Chicago wheat futures for December settled at $8.4425 a bushel on Wednesday, an increase of 3.3% and the highest closing price since July 11.
In other crops, December corn and November soybeans in Chicago both ended the trading day lower after earlier gains.
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(Updates with comments from US and Ukrainian officials starting in the 7th paragraph.)
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