The intensification of fighting is driving up grain prices
Grain prices have risen in recent days due to intensified fighting in Ukraine, but also dry weather in northern Europe and the United States.
Two major events are drawing markets’ attention: Tuesday’s destruction of the Kakhovka Dam in southern Ukraine, whose waters flooded tens of thousands of hectares of farmland, according to Ukraine’s Agriculture Ministry, and statements by Russia’s Defense Ministry that Ukrainian forces were accused on Wednesday sabotaged an ammonia pipeline connecting the Russian city of Togliatti with the Ukrainian port of Odessa in the Kharkiv region (northeast) on Monday. It has been unpowered since February 2022, but Moscow hopes to get it back online.
Before the war, Russia was able to annually export more than 2.5 million tons of ammonia, the main ingredient in nitrogen fertilizers, mostly to the European Union. Moscow has repeatedly reiterated that the Black Sea Grains Agreement signed in July 2022, which allowed Ukraine to export more than 31 million tons of grain, would only be extended if progress was made on its own grain and fertilizer exports.
“The reactivation of the ammonia pipeline was part of the Russian conditions for an extension of the Black Sea Agreement. Its destruction could bury the UN project, which wanted to “reopen” at the request of Russia and “extend” the agreement to other Ukrainian ports at the request of Kiev, explained Damien Vercambre of Inter Courtage, interviewed by Agence France -Press.
US winter wheat is up nearly 10% since last Wednesday, and its price is up 4.3% in five days on the Euronext platform.