A day after Turkey and the United Nations mediated the landmark agreement between Russia and Ukraine to unblock grain exports, wheat prices tumbled back to levels last seen before Moscow invaded its neighbor.
In Chicago, the price of wheat for delivery in September dropped 5.9% to $7.59 per bushel, which is equivalent to about 27 kilograms (60 pounds) and the lowest close since Russia invaded Ukraine on Feb. 24. On Euronext, wheat prices for delivery in September fell 6.4% to $325.75 per ton. Friday's agreement between Kyiv and Moscow – through United Nations and Turkish mediation – establishes safe corridors for Ukrainian ships to come in and out of three designated Black Sea ports in and around Odessa.
Russia and Ukraine together produce about 30% of the world's wheat exports. Up to 25 million tons of wheat and other grain have been blocked in Ukrainian ports by Russian warships and landmines Kyiv has laid to avert a feared amphibious assault.
Despite Friday's retreat in wheat prices, analysts expressed skepticism about the accord's ability to sidestep the realities of the grinding Russia-Ukraine conflict amid doubts over Moscow's willingness to implement the deal.
"I'm still skeptical and I don't think I'm alone in that in questioning that it will actually move much grain," said Michael Zuzolo, president of Global Commodity Analytics & Consulting. But Zuzolo said wheat prices might not have much further to fall, given that drought conditions are hitting output in some other parts of Europe.