Wheat Climbs With Corn as Ukraine Crisis Imperils Exports

Wheat climbed the most since 2012 and corn rallied to the highest price since September as tensions escalated in Ukraine, a leading exporter of both grains.

Ukraine, set to be the third-largest corn shipper this year, mobilized its army reserves after Russia seized control of the eastern European country’s Black Sea region of Crimea, sparking one of the most serious standoffs between the West since the end of the Cold War. Ukraine probably will boost wheat exports this season to 9.5 million metric tons from 7.1 million a year earlier, making it the sixth-biggest supplier, according to the International Grains Council.

Unrest in the Ukraine “is working to lift prices,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “This is going to create extra risk premium in the market. Up and down volatility is going to be unusually high, especially for a time of year when things are normally very sedate.”

Wheat futures for May delivery jumped 4.9 percent to close at $6.315 a bushel on the Chicago Board of Trade, the biggest advance since Sept. 28, 2012. Prices touched $6.445, the highest since Dec. 10.

Corn futures for May delivery climbed 1.5 percent to $4.705 a bushel on the CBOT, after touching $4.8275, the highest since Sept. 3. Prices are up 11 percent this year.

Grains are rebounding after prospects for record crops sent corn down 40 percent in 2013, the biggest decline since at least 1960 and the most among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. Wheat tumbled 22 percent last year.

Ukraine Shipments

Ukraine was the fourth-largest corn exporter in 2012-2013, behind Brazil, the U.S. and Argentina, IGC data show. The country may overtake Argentina this year, shipping 18.3 million tons through June from 13.6 million tons a year earlier, according to the IGC. That compares with forecasts for 35.5 million tons from the U.S. and 24 million tons from Brazil.

“I do see notable risks here,” said Jaime Nolan-Miralles, a risk analyst at INTL FCStone Inc. in Dublin. “It is already firming up cash-market prices in Europe and raises notable questions for grains-flow potential out of the Black Sea.”

Corn prices in Ukraine are rising as farmers slow sales, holding grain as a hedge against the nation’s depreciating currency, the U.S. Grains Council said last week. While exports from Odessa and other Black Sea ports are continuing and vessels are being loaded, price increases may slow down future sales, it said.

Ukraine still has about 4 million tons of corn and 2.5 million tons of wheat to ship as part of its 2013-2014 export campaign, according to Olivier Bouillet, manager of the Kiev office of Paris-based farm adviser Agritel SA.

Soybean futures for May delivery fell 0.3 percent to close at $14.0925 a bushel, reversing earlier gains.

To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net; Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; John Deane at jdeane3@bloomberg.net

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