Wheat jumped to the highest level in more than 13 years, extending a rally that is adding to inflation concerns worldwide as Russia’s attack on Ukraine put a vital source of global supplies at risk.
Futures in Chicago rose as much as 2.8 percent to US$9.6075 a bushel before easing.
Gains were capped on Thursday, when prices surged by the maximum allowed by the exchange.
Corn and soybeans also climbed yesterday, while palm oil retreated in Malaysia after a record-breaking rally.
Russia and Ukraine are key suppliers of a raft of agricultural goods to regions including Asia and the Middle East.
The conflict has the potential to upend global trade flows.
The two nations account for more than one-quarter of the world’s trade in wheat, about one-fifth of corn sales and 80 percent of sunflower oil exports.
“Food prices are already high,” said Paul Bloxham, Sydney-based chief economist at HSBC Holdings PLC. “An additional rise in commodity prices is something that will further lift headline inflationary pressures. A lot of emerging economies are still dealing with the direct impacts of the [COVID-19] pandemic, so it’s not the only shock that’s being dealt with.”
The conflict is already rippling through the agriculture sector.
Some of the top crop traders, such as Bunge Ltd, have been forced to shut down in the region, while Egypt — the world’s biggest wheat importer — canceled its tender on Thursday after drawing a lone offer of French grain.
Benchmark wheat in Chicago was 0.9 percent higher at US$9.4350 a bushel at 6:55am London time after jumping to the highest level since June 2008 earlier in the session.
Corn rose 1.3 percent to US$6.9950 a bushel and soybeans gained 0.6 percent. Palm oil lost as much as 5.3 percent to 6,112 ringgit per tonne, falling for the first time in seven sessions.
In addition to the Russia-Ukraine crisis, drought in South America has parched harvest areas.
Palm oil, which is used in thousands of products from cookies to shampoo, has rallied after a labor shortage crimped output in major producer Malaysia.
Bunge suspended operations at two oilseed processing facilities in Ukraine and closed its local offices due to the military action, it said in a statement.
Archer-Daniels-Midland Co has closed an oilseed crushing plant in Chornomorsk, a grain terminal in the port of Odesa, six silos and its trading office in Kyiv.
“The Russia-Ukraine conflict will have large ramifications” for global grains and oilseeds markets, Dennis Voznesenski, an analyst at Rabobank in Sydney, said in a note yesterday.
A full-scale conflict “will see exports out of the region grind to a halt, at least in the short term, due to blockages to shipping and the high cost or lack of availability of insurance for vessels,” Voznesenski said.
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