Wheat prices rose for a third straight day on Thursday after Russia threatened to treat ships bound for Ukrainian ports as carriers of military cargo, raising fears of a global food security crisis, CNBC reported.

The most active wheat contract traded on the Chicago Mercantile Exchange rose about 1.4 percent to 737.6 cents a bushel, hitting a three-week high.

At the previous meeting, the contract rose 8.5%, the biggest daily gain in more than a year, amid rising geopolitical tensions.

However, wheat prices remain well below the peak of 1,177.5 cents per bushel reached last May.

The increase follows the Kremlin’s decision on Monday to withdraw from the Black Sea Grain Initiative, a landmark wartime agreement that provided a maritime humanitarian corridor for Ukrainian grain exports.

UN chief Antonio Guterres said he “deeply regrets” Russia’s decision to end the initiative, which has effectively ended a “lifeline” for hundreds of millions of people around the world facing hunger and those already struggling with rising food prices. food.

The head of the European Union’s foreign policy department, Josep Borrell, said on Thursday that Russia’s decision to withdraw from the agreement will jeopardize global food security.

“We already know that this will lead to a big, huge food crisis in the world,” Borrell said Thursday ahead of a meeting of EU foreign ministers.

Attacks on grain terminals

In recent days, Russian troops have carried out large-scale strikes with missiles and drones on the port and grain infrastructure in southern Ukraine.

The Institute for the Study of War, a US think tank, said on Wednesday that the recent attacks could reinforce Russia’s objections to renewing the Black Sea grain deal and prevent Kyiv from exporting agricultural goods.

Ukraine’s agriculture ministry said on Wednesday that recent attacks on the southern Ukrainian port of Odesa and other cities had destroyed 60,000 tons of grain, as well as critical infrastructure.

Western and Ukrainian officials have accused Russia of essentially targeting anyone who relies on Ukrainian grain exports and putting vulnerable populations at risk.

A significant part of Ukrainian grain and food products goes to the countries of Africa and the Middle East.

Moscow warned that starting Thursday, all ships bound for Ukrainian ports will be considered “involved in the Ukrainian conflict on the side of the Kyiv regime.”

Russian President Vladimir Putin has said that the country will immediately restore the international grain agreement if his demands are met. Among them is the abolition of restrictions that limit the full shipment of domestic grain and fertilizer exports, as well as the abolition of sanctions against the Rossilhospbank.

Since its signing in July last year, according to UN estimates, the Black Sea Grain Initiative has allowed the export of more than 32 million metric tons of food products from three Ukrainian Black Sea ports – Odesa, Chornomorsk, and Yuzhny, formerly known as Yuzhny. 45 countries of the world.

“Additional pressure on supplies”

The UN said the agreement played an “indispensable role” in global food security, and analysts said it supported price stability and prevented shortages in developing countries.

Investors, however, prepared to liquidate the initiative.

“Ukraine will now be forced to export most of its grain and oil crops through land borders and Danube ports. This will lead to a significant increase in transport costs and will put additional pressure on the profits of Ukrainian farmers,” said Carlos Mera, head of agricultural markets at the Dutch lender Rabobank, on Monday.

“The side effect of this is that it could lead to them planting less next season, putting further pressure on supplies,” he added.

Ultimately, Mera said, the concerted denunciations mean that low-income countries in Africa and the Middle East are likely to become more dependent on Russian wheat, which accounts for more than 20% of the world’s wheat exports.