Wheat extended a surge to the highest level in five months after Russia attacked a port on the Danube river in Ukraine, intensifying efforts to cripple a vital export route for Ukrainian grain to reach world markets.
A drone attack on Monday hit the Danube port of Reni, destroying a grain hangar. That’s about a week after Moscow ended a deal that allowed Ukraine to ship its crops across the Black Sea, and subsequently attacked Odesa ports.
“This strike on the Danube is a huge deal,” said Michael Magdovitz, a senior commodity analyst at Rabobank Group. Wheat is likely to be most affected by any shutoff in export capacity, followed by corn, he said.
Vegetable oils may still be transported on truck and train, but it’s less cost effective for grains to be exported that way, Magdovitz added.
Wheat futures climbed as much as 2.6% in Chicago to $7.7725 a bushel, the highest since Feb. 21. Futures jumped by the exchange limit the previous day. Corn for December delivery rose as much as 0.7%.
Reni is one of Ukraine’s biggest river ports for grain and is located on the Danube at the border with Romania. Local traders had been expanding capacity there in response to Russia’s sea blockade. While it’s unclear how far the attacks will impact exports from Reni, the strikes increase operational risks.
Read more: Ukraine’s Wheat Exports Are Hobbled; Is Russia Next?
