Wheat climbs to four-month high as traders assess Russia risks

Wheat climbed to a fresh four-month high after the armed uprising in top exporter Russia added uncertainty over the outlook for grain shipments from the Black Sea breadbasket.

Russia is expected to be the world’s biggest wheat exporter this season and next, and any shift in its shipments would have a significant impact on global flows.

There doesn’t appear to be immediate disruptions to its wheat trade, although the shipping industry will be assessing the safety of operations in the region, said Carlos Mera, head of agricultural commodities market research at Rabobank.

Chicago wheat futures climbed 1.3% to $7.56 a bushel as of 10:38 a.m. in New York trading Monday, after earlier rallying as much as 3.2% as traders weighed the implications of the weekend events.

The advance puts prices on track for a 29% monthly gain, the biggest since 2015, which has also been driven by dry weather parching U.S. corn and soy crops.

Convoys loyal to Yevgeny Prigozhin, leader of the Wagner mercenary group, advanced toward Moscow on Saturday, demanding the removal of President Vladimir Putin’s army chiefs.

A deal was struck to end the insurrection, prompting Prigozhin to halt his assault and agree to go into exile. It represented the greatest threat yet to Putin’s almost quarter-century rule.

The situation could add to worries over the future of the pact that allows Ukraine to ship grain from Black Sea ports.

The deal is up for renewal in mid-July and Ukraine’s infrastructure minister last week said he was “not optimistic” over its extension.

“Political upheaval in Russia makes it less likely that they will have time and willingness to sit down at the table and discuss the details of a grain deal,” Mera said by phone.

The rapid chain of events in Russia left the U.S. and Europe trying to comprehend the political implications of a mutiny that opens cracks in Putin’s previously unquestioned authority in the Kremlin.

The crisis unfolded amid bitter divisions in Russia over the faltering war in Ukraine, as a Ukrainian counteroffensive tries to push Russian forces out of occupied territories.

Risks to the global market “appear much more muted” as Putin remains in control, Erik Meyersson, a strategist at Sweden’s SEB, said in a note. Still, the bank now sees a lower probability of a further extension of the Black Sea grain deal, adding to the upside for grain prices.

Russia’s agricultural industry is operating normally and production chains are stable, Tass reported Saturday, citing Agriculture Minister Dmitry Patrushev.

“If escalation were to increase, things could change,” Kona Haque, head of commodities research at ED&F Man, said on Bloomberg Television with Francine Lacqua. “For now, I think it’s just a wait-and-see approach.”

Chicago corn and soy futures also jumped.