Wheat prices rose as Ukraine announced that a large dam had been hit by Russian forces, causing a flood that threatened grain supplies.
Wheat rose after Russian forces from the Ukraine announced that they blew up a huge dam in the south of the country, causing a flood that threatened the lives of thousands and grain supplies sent from the Black Sea.
Wheat prices increased by 3 percent on Tuesday, and continued to rise from the lowest level in 30 months last week.
In a statement on Twitter, Deputy Minister of Infrastructure of Ukraine Mustafa Nayyem announced that more than 80 settlements and the city of Kherson remain in the flood zone and that hundreds of thousands of lives may be lost.
“The destruction of the dam looks like a major escalation that risks dire consequences and headlines,” said Andrey Sizov, Managing Director of agricultural consulting firm SovEcon. “This may be just the beginning of a bull rally,” he said.
However, investors are also assessing the impact of extreme weather conditions on crops globally. Australia experienced the second driest May on record nationwide.
Australian harvest could drop 34 percent
It is stated that the harvest, which will start in November in the country, may be 34 percent lower than last year, the highest harvest ever. The country is the world’s second largest exporter this season.
It is considered that China, the world’s largest wheat importer, may have to buy higher quality wheat from overseas countries, depending on the results of the rain-soaked harvest in Henan province, the largest producer.
On the other hand, spring wheat ratings in the USA are well below the average expectations, while the drought in Argentina delays planting.
The exchange rate weather in the USA is also hurting other crops. Conditions in the world’s largest corn producer suffered the most severe deterioration in nearly 3 years due to insufficient rainfall. Dry weather and stress will continue to occur in the southern, central and eastern parts of the US Midwest, according to weather forecasting company Maxar.