Singapore, Aug. 6: Suppliers of Russian wheat to Asia are edging nearer to cancelling contracts after Moscow’s ban on grain exports, forcing buyers to turn to alternative origins as US wheat futures soar to a 23-month high.
There was no immediate panic reaction from top Asian importers because global stockpiles were ample, but the rally could stoke fears of food inflation in key buyers with a near doubling of prices on the Chicago Board of Trade since lows in June, analysts and traders said on Friday.
US wheat futures jumped more than 6 per cent, taking this week’s gains to more than 26 per cent in a buying frenzy sparked by the move to temporarily halt grain shipments from Russia, the world’s third-largest exporter.
“There are two things driving the market, fear and fund buying,” said Mr Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
“There is no panic because world stocks are high. If you are a buyer you are not going to chase these prices, you are only going to buy to fill spot needs.”
The rally in wheat has spilled over into the US corn and soybeans, with both gaining more than 10 per cent in July, although crop-friendly weather in key growing regions in the US midwest capped gains.
Trading companies that have sold Russian wheat to millers in Asia are considering declaring force majeure on the supply contracts which could involve up to 1 million tonnes of wheat.