European wheat rallies to one-year high on escalating Black Sea attacks
PARIS, July 15 (Reuters) - European wheat prices jumped nearly 6% on Wednesday as escalating Black Sea attacks raised concerns over key grain export routes, with traders expecting some demand to shift to European supplies.
Benchmark September milling wheat BL2U6 on Paris-based Euronext, was up 5.7% by 1035 GMT to 228.75 euros a metric ton, a price not seen since June last year.
Ukrainian attacks on shipments in the port of Azov have forced Russia, the world's top grain exporter, to restrict shipping in the Sea — a route that handles about a quarter of its grain exports, sources told Reuters. Shipping remained restricted on Tuesday, they said.
Meanwhile, Russia in recent days has stepped up attacks on Ukraine's deepwater Black Sea ports in the Greater Odesa area, which handle much of the country's grain and other cargo and are vital to its wartime economy.
"The market is increasingly pricing Black Sea export logistics rather than crop size," a German trader said.
"Continued attacks on Russian shipping, strikes on Ukrainian ports and reports that trading houses have suspended purchases increase uncertainty over export execution. If this persists, some demand could gradually shift towards EU wheat, despite Russian wheat remaining the cheapest origin as for now," he added.
Ukraine's top grain exporter Kernel halted operations at Chornomorsk port after Russian attacks, while another Russian strike damaged its vegetable oil terminal in the Odesa region, it said late on Tuesday.
"The big question about the Azov attacks was whether wheat demand will be moved to the EU from Russia. Now we have the extra question about Ukrainian wheat if the Russians attack Ukrainian ports," a German trader said.
A French trader said: "Clearly when you look at a map this means the whole transit will be disturbed and it can only benefit the EU."
Ukrainian ports had not suffered major damage during the war.
Meanwhile, the heatwave continued in west Europe. The French harvest, which has suffered from the heat, is seen falling 4% and there is also talk the German harvest may have lost over 600,000 to 1 million tons in volume.
German wheat harvesting is now starting.
