Expert: Ukraine war means continual shifting wheat market dynamics

The world wheat markets used to be “globally linked,” but the dynamics surrounding the war in Ukraine continue to shift, a prominent professor of agricultural finance said Thursday.

The wheat prices on the Chicago Mercantile Exchange contract, the Black Sea ports contract, which is generally Russian wheat, and the Ukrainian ports contract, were moving together but with the war they split, said Calum Turvey, a professor at Cornell University, in a presentation to the Commodity Futures Trading Commission Agricultural Advisory Committee.

Turvey noted that when Russia invaded Ukraine “there was no literature on the impact of war on futures markets,” and that he had decided to study the Ukraine situation with his students.

Turvey noted that Ukrainian wheat is not that big on world markets but that Ukraine is a very important supplier in the countries to which it exports, mainly in Africa.

As the war has gone on, more and more problems have developed, he said. In addition to the initial question of getting wheat out of the ports, within the combat zone acreage was reduced, elevators were destroyed, and production became more difficult as people fled. In addition, insurance companies have been reluctant to sell policies on shipping.

Turvey said his paper is available, but that he will not submit it for peer review because the situation keeps changing.

Tags: wheat, ports, markets, Ukraine, Russia, prices, Production