International wheat prices have soared to a two-year high following intensified attacks on commercial ships and ports in the Black Sea and Sea of Azov by Russia and Ukraine. This disruption, while not yet at the scale of 2022 when Russia's invasion halted Ukrainian port loadings, comes at an critical time for the food industry. Other key food commodities like corn and rapeseed have also seen rallies. Concerns are further amplified by the throttling of the Strait of Hormuz, impacting fertilizer supplies, heatwaves diminishing European crops, and the developing El Niño pattern which threatens agricultural yields.
The most active wheat futures contract in Chicago reached $6.95 per bushel, with Paris milling wheat prices hitting a 17-month high. UK grain futures also saw significant strengthening, with November futures rising by £10.25/t to £196.25/t, the highest price for a nearby contract in almost two years. Andrey Sizov, managing director of grain consultancy SovEcon, noted that the market is realizing this is not a typical short-term Black Sea rally, suggesting more serious consequences for global grain and wheat supplies. Traders are reportedly suspending purchases in Odesa, and war risk insurance premiums have surged, with some insurers refusing coverage for Ukrainian ports.
The escalation of the conflict has led to a significant reduction in Ukraine's grain export capacity, with estimates suggesting about a third of its Black Sea port capacity affected by Russian strikes. Russian exports from the Sea of Azov, which account for up to 25% of the country's total exports, are also curtailed by Ukrainian strikes, leading analysts to cut Russian wheat export forecasts for July by 20%. The International Grains Council (IGC) reduced its forecast for the EU wheat crop by 1.8Mt, and the German farm co-ops' association DRV cut its forecast by 0.7Mt to 21.9Mt. The French wheat crop, excluding Durum varieties, is estimated at 30.8Mt, down 8% from 2025 due to hot weather.
