Just what the world needs right now: Russia and Ukraine bombing the heck out of each other's grain export facilities.
The Black Sea, from Russia's ports at Novorossiysk and Tuapse to Ukraine's Odesa, is the Strait of Hormuz of wheat, only more so. Russia alone accounts for a quarter of global wheat exports in a normal year, Ukraine another 10%, says Matt Darragh, grains and oilseeds analyst at consultant Kpler. This year won't be normal.
The ex-Soviet neighbors expanded their air war to grain-related targets over the summer, just in time for the harvest. Ukraine's exports were 20% of last year's in the first half of August, Kyiv reported. Russia's have fallen by half, according to consultant Sovecon.
Chicago-traded wheat futures have jumped by a quarter since July 1 to their highest levels since 2023. Alternative staples corn and rice have risen about as much. "Wheat, rice, corn, and barley are all relatively correlated," Darragh observes.
Russia was bombing the heck out of Odesa in the first summer of the war, 2022, but was persuaded to stop by Turkish diplomats to look like a good global citizen. This time is different, and not in a good way, says Samuel Charap, distinguished chair in Russia and Eurasia policy at RAND.
Ukraine can return fire now, multiplying the threat to global supplies. Russia nevertheless refused Ukrainian President Volodymyr Zelensky's public offer of a grain truce. "Punishing the other side is more important for Russia now than courting international opinion and not losing the global south," Charap says.
Zelensky has said that Russian counterpart Vladimir Putin is demanding that Ukraine stop attacks on Russian oil and energy infrastructure in exchange for it stopping grain attacks. Zelensky rejected that idea, despite Ukraine's much heavier dependence on grain than oil-rich Russia. "Ukraine is betting that the European Union won't let them go bankrupt," Charap comments.
While missiles and drones fly across the Black Sea, customers already rocked by an Iran war-driven oil shock may have to tighten their belts. Russian-Ukrainian wheat exports are concentrated across the Mediterranean in Egypt, Algeria, and Morocco. "For some countries in North Africa and the Middle East, wheat is 50% of what they eat," says Joseph Glauber, research fellow emeritus at the International Food Policy Research Institute.
Egypt, the world's biggest wheat importer, has already seen inflation jump three percentage points this year to near 15%, with budget deficits running above 7% of gross domestic product, according to the World Bank.
The good news is that world granaries are full after bumper 2025 wheat harvests from Argentina to Australia, Darragh says. Russian and Ukrainian growers can safely store their crop for up to a year, promising a supply flood if a cease-fire can be achieved, he adds.
That is keeping prices 30% below where they spiked in the spring of 2022. "There are still a few bears left in the market, and the rest of the market is being cautious," Darragh says.
Alternative sources could be less bountiful this coming year. U.S. winter wheat production fell 20% due to drought in the Midwest, Glauber says. Canadian farmers shifted toward canola for higher prices at planting time, he adds. Australian output could be curtailed by El Niño drying out its southern agricultural belt.
Black Sea supply could get worse before it gets better, Charap predicts. "This is an escalatory spiral," he says.
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