Wheat futures surge after Russia strikes Ukrainian grain terminal

Global wheat markets surged after a Russian attack on silos at the Ukrainian port of Mykolaiv raised additional doubts about the likelihood that Russia will allow Ukrainian crop exports.

“Traders are losing confidence Russia will live up to their expectations to allow Ukraine to export grain, after two warehouses with sunflower meal at Nikatera (Ukraine) were hit by a rocket over the weekend,” Terry Reilly, senior grain and oilseed commodity analyst at Futures International, told Fastmarkets Agricensus.

“That and thin volume, with many countries on holiday, is creating a wide trading range,” Reilly added.

Chicago SRW futures were down 5-6% on the previous settlement, with July trading at $11.01/bu and September at $11.12/bu.

Chicago HRW futures were also down around 5% on last Friday’s settlement, with July at $11.78/bu and September at $11.84/bu.

“Part of the rally is because the nearby Chicago future had dropped $1.40 top to bottom in three sessions, and the market got oversold,” said Charlie Sernatinger of ED&F Man.

The Russian shelling of Mykolaiv is “putting the lie to the Russians about allowing grain to be exported out of Ukraine through the Black Sea – if you don’t have a loading terminal, you can’t load any ships,” Sernatinger said.

The national holiday on Monday, June 6, in France where drought has led to concerns about the size of the country’s wheat crop, has reduced trading volume in Europe and added to the volatility, analysts and brokers said.

“It’s a holiday in France, so the cooperatives are not making any statements on the damage, but commercials feel like it was substantial, pushing up Matif futures, and US futures are responding,” Sernatinger said.

In Europe, the front-month September Euronext milling wheat futures contract approached the €400 per tonne mark, trading at €398.5 per tonne, up €20.25 per tonne, while December climbed by €19.50 per tonne to €392.75 per tonne.

“Finally, there was a major hail storm over the center of France this weekend with tennis-ball-sized hail falling on wheat fields and vignobles, with bad damage suspected to the crop,” Sernatinger said.