🟡 WHEAT trims gains

Destruction of dam in key Ukrainian growing area may have limited impact on production

WHEAT traded as much as 4% higher earlier today and reached 650 cents per bushel area - the highest level since May 17, 2023. However, those gains have been trimmed to around 0.9% now. Initial gains were triggered not only by concerns over wheat production outlook in Australia and the United States but also by destruction of a hydroelectric dam on Dnipro river in Nova Kakhovka, Ukraine which triggered flooding. While the area is one of key growing regions in Ukraine, it should be noted that majority of the area is currently under Russian occupation. When it comes to Ukraine-controlled areas, resulting flooding should not have much impact on wheat production.

Map showing scale of pre-war wheat production in different Ukrainian regions. Location of a destroyed dam has been marked with 'X'. Source: USDA

Apart from destruction of Ukrainian dam, wheat traders are also paying attention to damage done to the pipeline used by Russia to export ammonia. While it is said that damage is a result of Russian shelling, it may have a big impact on the future of Black Sea grain initiative, that is currently set to end in July. If Russia demands Ukraine to repair the pipeline and Ukraine declines, Russia could use it as an excuse not to extend Black Sea grain initiative beyond current deadline.

WHEAT has trimmed most of earlier gains. The latest news from the United States and Australia suggest that supply in 2023/24 season may be significantly limited. Source: xStation5