ALBAWABA – Wheat prices rose in Asian trading Monday after a Russian warship fired warning shots on a cargo vessel in the Black Sea to stop for inspection on Sunday, news agencies reported.
The dry freight carrier was fired upon after the ship’s operators didn’t respond to a request for inspection, Russia’s defense ministry said.
The vessel was then allowed to go on its way to the Ukrainian port of Izmail, the ministry said, without elaborating on the cargo it carried.
Simmering tensions in the Black Sea corridor that Ukraine announced Sunday drove wheat prices higher as futures climbed as much as 1.2 percent before paring gains. Wheat futures stabilized and traded at 0.3 percent higher at $6.56 a bushel, according to Bloomberg, after having fallen 1.5 percent on Friday.
Russia and Ukraine had agreed on a corridor that would allow the latter to export grains under specific conditions last year. The agreement was dubbed the Black Sea Grain Initiative and was brokered by Turkey and the United Nations.
However, Russia claimed the terms of the agreement were not met and claimed that Ukrainian grain was not going to the countries as agreed upon, but was going to Europe and other first world markets.
Putin then backed out of the deal, back in July, and declared the Black Sea Grain Initiative over and that Russia is going to fill the gap in wheat supplies to impoverished nations.
Moscow also said that it will deem all ships heading to Ukrainian waters as potentially carrying weapons, Bloomberg confirmed.
On Saturday, the United States (US) Department of Agriculture raised its estimate for Russian wheat cargoes to 48 million metric tons for the 2023-24 season. As a result, almost a quarter of the world’s wheat trade will now come from Russia.
Concerns also remain elevated after a Ukrainian drone attacked a Russian-flagged oil tanker about a week ago, according to Reuters. Wheat prices still remains around 17 percent lower this year, given the successful harvest in Europe, which has offset the market, somewhat.
