Since Russia’s invasion of Ukraine in early 2022, wheat prices hit an apex before falling back down to earth. As a top global producer, Russia is now looking to put a vice grip on the market. That could push wheat prices higher again.
With Western sanctions raining down on Russia since its invasion of Ukraine, it wasn’t an overnight decision. Russia’s attempts to control the wheat market have been building over the last few years. But that hasn’t stopped wheat prices from trending lower.
That trend could reverse given their latest moves. That’s because Chicago SRW wheat futures are already up 15% for the year. In the past five years, futures are up almost 40%.
“Russia is stepping up its bid to control even more of its crucial grain industry — potentially giving it greater power over exports — just as worries mount over global supply,” Bloomberg reported. The report noted Western companies like “Cargill Inc. and Viterra pulled back from Russia last year after government pressure to make way for local firms.” That has since placed “the market in the hands of fewer companies, some that have or had links to the Kremlin.”
Russia Expands Its Lead
Russia’s grip on the wheat market comes as it maintains its profile in terms of being the top exporter. Per a World Grain report, the latest data from the International Grains Council (IGC) shows that Russia will export a record amount of wheat in the current year, giving the country a 26% market share globally.
“The figure is well ahead of the second largest exporter in 2023-24, the European Union, which is forecast to ship 35 million tonnes,” the World Grain report said. “Russia is the only country among the world’s top wheat exporters expected to increase its outgo from the previous year, with the EU, Canada, Australia and the United States all reducing shipments, according to the (IGC) report.”
Short-term traders or long-term investors who want to get exposure to the upward momentum in wheat’s prices may want to take a look at the Teucrium Wheat Fund (WEAT). It offers an easy way for investors to gain exposure to the price of wheat futures in a brokerage account. Long-term investors looking to simply add wheat to their portfolio as a diversification component can use WEAT. Short-term traders can use the fund to get exposure to wheat futures without having a margin account.
For more news, information, and analysis, visit the Commodities Channel.