Wheat Trends Higher After Black Sea Grain Deal Ends

The Russia-Ukraine conflict continues to escalate after an extension of the Black Sea grain deal was nixed. In the meantime, wheat futures rose, bringing delight to traders bullish on the commodity.

However, Russia is dialing up its aggression, according to a Bloomberg article. This could continue to put upward pressure on agricultural commodities, including wheat.

“Wheat futures soared as much as 9% in Chicago as Russia issued a warning on the safety of new vessels headed to Ukrainian ports,” Bloomberg reported.

“That increases the military risks in the region and could quell even vague hopes for Ukraine to restart exports via the Black Sea, following the collapse of the grain-export deal earlier this week,” the report added.

The absence of an extension for the Black Sea grain deal could translate to higher food prices. This only exacerbates a growing food supply crisis that came to the forefront after Russia’s invasion of Ukraine early last year.

EM Economies in Precarious Spot

According to a Global News report, Matias Margulis, an associate professor of food systems at the University of British Columbia, said the situation is “very concerning for food security globally.” As mentioned, this adds an additional catalyst for food prices to move higher—something that developed countries might be able to handle, but it puts emerging economies in a precarious position.

“It’s really hard to determine, but it would be concerning if this was to add pressure on prices,” Margulis said. “The effects might be marginal here in North America, but it will be far more significant in developing countries, which are much more dependent on food imports.”

Traders looking to play off further rises in wheat futures can use the Teucrium Wheat Fund (WEAT). The fund provides investors with an easy way to gain exposure to the price fluctuations in wheat through the convenience of an exchange traded fund (ETF).

Those who want an all-encompassing approach can use the Teucrium Agricultural Fund (TAGS), which is essentially a fund of funds. It features a low 0.13% expense ratio and combines exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.

In addition to WEAT, TAGS includes the following funds:

  1. The Teucrium Corn Fund (CORN)
  2. The Teucrium Soybean Fund (SOYB)
  3. The Teucrium Sugar Fund (CANE)

For more news, information, and analysis, visit the Commodities Channel.