Wheat swung between gains and losses after a weekend in which top exporter Russia experienced an armed uprising that posed the greatest threat to President Vladimir Putin’s almost quarter-century rule.
A rebellion by Yevgeny Prigozhin, leader of the Wagner mercenary group, took fighters to within hours of Moscow. A deal was struck to end the insurrection, prompting Prigozhin to halt his assault and agree to go into exile.
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Wheat futures in Chicago fluctuated as traders weighed the implications of the events, dropping as much as 1% to $7.3925 a bushel and rising 0.5%. Prices are about 25% higher this month on dry weather in the US, and after fighting between Russia and Ukraine escalated, damping the outlook for a deal that allows Ukraine to ship grain from Black Sea ports.
The rapid chain of events in Russia left the US 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.
Russia is expected to be the world’s top wheat exporter this season and next, and any disruption to its shipments will have a significant impact. Moscow has increasingly flexed its powers in the global market following the invasion of Ukraine, including throttling Ukrainian exports from Black Sea ports.
“With Putin seemingly remaining in control, the first-order risks to global markets now appear much more muted,” Erik Meyersson, a strategist at Sweden’s SEB AB, said in a note. “What remains as a risk, however, is the prospect of further extension of the Ukraine grain deal.”
The bank now sees a lower probability of a further extension when the Black Sea grain deal expires mid-July. “The extent to which recent Russia events weigh adversely on the probability of an extension should therefore push grain prices upwards,” Meyersson added.
--With assistance from Megan Durisin and Áine Quinn.
