Frost, dry and missile strike impacts wheat market

A missile strike on a vessel carrying wheat has had an immediate impact on the futures market. See what it means for prices.

Wheat prices have rallied by $35 a tonne due to seasonal uncertainty and conflict in the Black Sea.

Chicago Wheat Futures are trending upward after a ship carrying more than 26,000 tonnes of grain was hit by a Russian missile on Friday.

Market Check chief executive Nick Crundall said the wheat market was on edge.

Mr Crundall said there were already concerns about the dry season and the fact that world stocks are tight.

He said the vessel that was hit by a Russian missile impacted the market immediately.

“It is the first time a (civilian) vessel in open water has been hit in this conflict, and it has demonstrated that there is risk,” he said.

Mr Crundall said the market position for wheat futures in December 2024 was currently $324.50 a tonne.

“This has come up from the market’s lowest point a few weeks ago,” he said.

In addition Mr Crundall said the extent of the recent frost in southern NSW and Victoria was not fully known.

However, poor weather, in general, had helped to kick prices along.

Farmer Andrew Weidemann. Picture: Supplied

“Prices have responded because of the dry conditions,” he said.

“Victoria is having a tough season, South Australia is also having a tough season, and parts of Victoria are doing it tough because it is dry,” he said.

“Farmers are certainly looking to the skies for rain.”

Reuters reported that Ukraine president Volodymyr Zelenskiy said the vessel carrying Ukrainian grain to Egypt had been hit overnight on Thursday by a Russian missile just after it left Ukrainian territorial waters.

It was the first time a missile had struck a civilian vessel transporting grains at sea since the start of Moscow’s invasion in February 2022. 

The Turkish-operated ship MV Aya was carrying 26,500 tonnes of grain destined for Egypt.

Rupanyup farmer and Grain Producers Australia’s southern director Andrew Weidemann said the global balance sheet for wheat was tight.

“Any shockwaves like ships being blown up will have a direct impact on the market,” he said.

“At the moment, here in Australia, prices appear to be trending up to $40 to $50 a tonne, which is stronger than the Chicago market,” he said.

Mr Weidemann said the strike on the ship last week showed the volatility in the market.

“There are already concerns about the season cutting out and dry conditions,” he said.

“And this week, parts of Victoria and southern NSW have been hit by a frost,” he said.

“The recent frost will certainly have a bearing on the market,” he said.

“And then we are desperate for rain too. That is an underlying problem.”