Wheat prices jump following collapse of major dam in southern Ukraine

Jun 6, 2023, 7:42 AM | Updated: 4:50 pm

WASHINGTON (AP) — Global prices for wheat and corn soared Tuesday after a major dam in Ukraine collapsed, renewing market fears about the fragility of the country’s ability to ship food to Africa, the Middle East and parts of Asia as it fights a war with Russia.

Wheat prices gained 2.4% in early trading Tuesday on the Chicago Mercantile Exchange, to $6.39 a bushel. The cost of corn rose more than 1%, to $6.04 a bushel, and oats gained 0.73%, to $3.46 per unit. Prices were higher earlier in the day but faded.

The destruction of the Kakhovka dam and hydroelectric power station, which sits in a Russian-controlled area on the Dnieper River, raised concerns about disruption to people are struggling with hunger and high food prices.

“Anytime this war shows signs of getting further escalated, there’s a lot of concern,” said Joseph Glauber, senior research fellow at the International Food Policy Research Institute. “Markets react to that.”

Ukraine and Russia are both major agricultural suppliers and the war’s disruption to their exports worsened a global food crisis tied to droughts and other factors. Breakthrough agreements brokered by the U.N. and Turkey last year got food moving again through the Black Sea, but it’s faced setbacks.

Russia briefly pulled out of the deal last year, has threatened to leave again, is only agreed to renew the deal for two months at a time.

“People are going to be watching to see what happens with the agreement,” said Glauber, former chief economist at the U.S. Department of Agriculture. “This reminds everyone that it’s not just pro forma, that this could be a very serious development if indeed the agreement is broken.”

There are massive agricultural fields in southern Ukraine where the dam burst, and while the collapse has endangered crops in the path of the floodwaters, Glauber says less wheat has been planted in that area because it’s near the fighting and a lot is growing elsewhere.

The collapse has threatened drinking water supplies, with officials also warning of a looming environmental disaster — pointing to oil escaping from the dam machinery and significant flooding.

Andrey Sizov, managing director of Black Sea agricultural markets research firm SovEcon, said the dam collapse looked “like a big escalation with dire consequences and huge headline risk.”

“This could be just the start of the bull run,” Sizov wrote on Twitter early Tuesday.

The wheat futures rally overnight and early Tuesday lost steam as the day progressed. As of around 3 p.m. ET, for example, the price of wheat was down to $6.27 a bushel.

Wheat, vegetable oil and other relief in prices has not made it to markets, grocery stores and kitchen tables.

Citi commodities analysts called the dam breach a “reminder of lingering inflationary risk in the goods market.”

It’s possible temporary jumps in prices follow significant news events, like the dam collapse, analysts say.

But circumstances are key — and expectations for food exports from Ukraine will likely “continue to diminish as we recognize that Ukrainian production will continue to be severely impaired because of the war,” said Joe Janzen, assistant professor at University of Illinois Urbana-Champaign’s College of Agricultural, Consumer and Environmental Sciences.

The supply of grain Ukraine is able to export is 40% lower than it was two years ago, Glauber said.


Bonnell reported from London.

United States News

President Joe Biden gestures after speaking to graduating students at the Morehouse College commenc...

Associated Press

Biden tells Morehouse graduates that scenes in Gaza from the Israel-Hamas war break his heart, too

Joe Biden on Sunday offered his most direct recognition of U.S. students' anguish over the Israel-Hamas war.

4 hours ago

A helicopter carrying Iranian President Ebrahim Raisi suffered a “hard landing” on Sunday, May ...

Associated Press

Helicopter carrying Iran’s hard-line president apparently crashes in foggy, mountainous region

A helicopter carrying Iranian President Ebrahim Raisi, the country's foreign minister apparently crashed in mountainous Iran on Sunday.

8 hours ago

Associated Press

Child is among 3 dead after Amtrak train hits a pickup truck in upstate New York

NEW YORK (AP) — A child was among the three victims killed when a passenger train hit a pickup truck, officials said. The northbound Amtrak train hit a Dodge truck Friday evening in North Tonawanda, New York, a small town along the Niagara River between Niagara Falls and Buffalo, police said. The victims included a […]

10 hours ago

Associated Press

11 hurt in mass shooting that marked a weekend of gun violence in Savannah, Georgia

SAVANNAH, Ga. (AP) — An argument between two women led to a gunfight that left 11 people hurt in a busy tourist area of Savannah, Georgia, late Saturday, one of five weekend shootings in the city, two of which were fatal, authorities said. Two people were injured in separate shootings Friday. Two more shootings Saturday […]

11 hours ago

Associated Press

Pro-Palestinian protesters set up a new encampment at Drexel University

PHILADELPHIA (AP) — Pro-Palestinian protesters set up a new encampment at Drexel University in Philadelphia over the weekend, prompting a lockdown of school buildings, a day after authorities thwarted an attempted occupation of a school building at the neighboring University of Pennsylvania campus. Up to 60 protesters were at the encampment on the campus’ Korman […]

12 hours ago

Associated Press

Power restored to most affected by deadly Houston storm, with the rest by Wednesday

HOUSTON (AP) — Houston area residents affected by deadly storms last week received some good news as officials said power had been restored Sunday to a majority of the hundreds of thousands who had been left in the dark and without air conditioning amid hot and humid weather. The widespread destruction of Thursday’s storms left […]

12 hours ago

Sponsored Articles



Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.


Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.


Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

Wheat prices jump following collapse of major dam in southern Ukraine