European wheat prices have risen amid threats from the Russian agricultural ministry it will suspend exports of wheat, barley, maize and rye from tomorrow until June 30 – according to reports from the Interfax news agency.
The government said: “The agriculture ministry and the trade ministry have prepared a draft government decree that would introduce a temporary ban on exports of the main grains from Russia from March 15 to June 30.”
This announcement caused Paris-based milling wheat futures to spike 9.25 per cent €380 per tonne for May, while UK prices have risen 3.5 per cent to £298.
The hike follows fears over supply disruption from conflict in Ukraine and potential retaliation to sanctions, with Russia needing to ensure secure food supplies.
Wheat is used in foods such as bread and pasta, alongside being key component in beer.
Russia is the world’s largest wheat exporter – with Egypt and Turkey among its main buyers – but it also competes with Ukraine and the European Union (EU).
A European trader told Reuters that an Russian export ban would be a “big game changer”, with investors hoping that any ceasefire in Ukraine would have resulted in a quick resumption of full exports from the Black Sea,”
They explained: “The EU would no doubt have to shoulder a big part of the export demand. I think if there is an export stop, Europe will be able to sell just about everything it has.”
Russian wheat exports are already down by 45 per cent for the start of the current July-June marketing season, because of a smaller crop and grain export taxes as well as export quotas which Russia has been using since 2021 as part of measures to stabilise domestic food inflation.
Last week, the economy ministry revealed Russia would suspend grain exports to neighbouring ex-Soviet countries until the end of August to further strengthen its food security
Conflict in Ukraine following Russia’s invasion would only exacerbate potential supply shortages – with the Kremlin considering counter-measures to ramped up Western sanctions, while conflict in the region could generally reduce production leaves.
Dmitry Rylko, the head of the IKAR agriculture consultancy, estimates that exportable surplus for the period is between 6-6.5m tonnes of wheat.
A key factor will be whether Russia will allow previous sales to be exported.
Another trader suggested any disruptions would be “disastrous news for importers like Egypt, Saudi Arabia and Algeria” which have booked large volumes of Russian wheat.
Commerzbank analyst Carsten Fritsch noted that alongside the resilient performance of wheat markets, rapeseed was also rebounding – closing trading last Friday at a record €905 per ton.
He said: “Rapeseed has also gained noticeably in wheat’s shadow. The Ukraine war is driving up the rapeseed price because 80 per cent of the world’s sunflower oil supplies come from the Black Sea region, so demand is now growing for alternative vegetable oils such as rapeseed oil. Rapeseed is being lent additional tailwind by the sharp rise in oil prices, as this is also pushing up prices of biofuels such as biodiesel, in which rapeseed oil is used.”