Attacks on Black Sea infrastructure in Ukraine and Russia have led to a significant surge in wheat futures, pushing them to nearly a three-year high. This disruption follows severe damage to Ukraine's largest port on the Danube and Russian terminals in Novorossiysk over the past two weeks, severely impacting export logistics. Global wheat prices have increased by approximately 6.5% this month and are now roughly 30% higher than a year ago, with benchmark Chicago futures climbing over 17% since early July.
Russia and Ukraine are major global grain exporters, together accounting for around 30% of global wheat exports. The current disruptions in the Sea of Azov and Black Sea regions are estimated to cut global grain supplies by 86 million tons this year, representing about 17% of global exports. Specifically, this includes 52 million tons from Russia and 34 million tons from Ukraine. Ukrainian agricultural exports alone could fall by 54% to 29.6 million tons due to Russian attacks.
This situation has largely halted civilian shipping in the Black Sea, with more than 97% of Russia and Ukraine's grain export capacity in the Azov and Black Sea basin shut down. There are no shipments from Ukraine's Black Sea terminals, and most major Russian grain terminals, including NZT, NKHP, KSK, and Taman, are closed. Ukraine is currently exporting grain through rail links and Danube river ports, hoping to reach 50% of its export potential if blockades continue. Global wheat importers, especially in the Middle East, Africa, and Asia, are now seeking supplies from higher-cost sources like Australia and the United States, with Australian Premium White wheat quoted at $315-$320 a ton and the cheapest U.S. wheat at around $305 a ton, significantly higher than Black Sea cargoes which were around $260-$280 per ton. This also impacts Ukrainian farmers, whose domestic grain prices have dropped below production costs, threatening future sowing.
