Ukraine war: Wheat prices soar after Russia warns shipping

Ukraine war: Wheat prices soar after Russia warns shipping

Media caption,

Watch: Footage shows the impact of attack on Odesa grain terminals

By Emily McGarvey

BBC News

Wheat prices have risen sharply on global markets after Russia said it would treat ships heading for Ukrainian ports as potential military targets.

Moscow pulled out of a deal this week that had guaranteed safe passage for grain shipments through the Black Sea.

A White House spokesperson accused Russia of planning to blame Ukraine for attacks on civilian ships.

Russia’s President Vladimir Putin said he would return to the grain agreement immediately if his demands were met.

They include reconnecting Russia’s agricultural bank to a global payment system.

A Russian air strike on the Ukrainian port city of Mykolaiv wounded 18 people on Wednesday night, according to a local official.

The region’s governor Vitaliy Kim said nine of the injured, including five children, were taken to hospital for treatment.

Other air strikes were reported on the port of Odesa.

Elsewhere, a drone strike in Russian-controlled Crimea killed a teenage girl, a Russian-backed official said.

Following previous air strikes around Odesa this week, Ukraine’s President Volodymyr Zelensky accused Russia of deliberately targeting grain export infrastructure and putting vulnerable countries at risk.

Kyiv urged other countries in the Black Sea region to intervene to assure the safe passage of cargo ships.

“From 00:00 Moscow time on 20 July 2023 [21:00 GMT Wednesday], all vessels sailing on the Black Sea to Ukrainian ports will be regarded as potential carriers of military cargo,” the Russian defence ministry said.

“Flag states of such vessels will be considered to be involved in the Ukrainian conflict on the side of the Kyiv regime,” it added.

Wheat prices on the European stock exchange soared by 8.2% on Wednesday from the previous day, to €253.75 (£219.78) per tonne, while corn prices were up 5.4%.

US wheat futures jumped 8.5% on Wednesday, their highest daily rise since just after Russia’s invasion of Ukraine.

Ukrainian Agriculture Minister Mykola Solskyi said strikes had destroyed 60,000 tonnes of grain and damaged considerable parts of grain export infrastructure.

Russia began targeting Ukraine’s ports in the early hours of Tuesday within hours of its withdrawal from the grain deal.

Image source, EPA

Image caption,

A grain ship that left a Ukrainian port earlier this week

Marex Capital analyst Charlie Sernatinger said the threat of this kind of escalation could “cut all of the waterborne grain shipments off from the Black Sea, both Russian, and Ukrainian” which would cause a similar situation to that at the start of the war.

Jim Gerlach, president of A/C Trading, said: “Things got heated back up over in Ukraine. There is some real shooting going on over there and nobody is going to get in the middle of that.

“That is the bread basket of Europe and shippers are pulling out.”

On Wednesday Mr Putin accused the West of using the grain deal as “political blackmail”.

Moscow also accused Ukraine of using the Black Sea grain corridor for “combat purposes”. It struck at Ukraine’s Black Sea ports after a suspected seaborne drone attack damaged its sea bridge to Crimea on Monday.

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