Global wheat buyers who have delayed restocking their inventories are bracing for higher costs when they return to the market in the coming weeks, with world prices soaring as the Russia-Ukraine war shows no signs of abating.
Top wheat importers in Asia, the Middle East and Africa that were counting on the Black Sea region for wheat have been finding it hard to secure supplies, as attacks on vessels and port infrastructure have brought cargo movements to a near standstill since July.
The constraints have triggered a rally in prices, with benchmark Chicago futures climbing 40% from June lows to a three-and-a-half-year high and physical prices from alternative exporters surging, threatening a fresh bout of food inflation for some of the world's most vulnerable consumers.
Most global importers have held off making alternative purchases for the past few months, hoping for an agreement between Russia and Ukraine to allow grain shipments, but local supplies are running thin, especially in import-dependent Asia, traders and millers said.
Competition for cargoes is poised to intensify until the end of the year, when the Southern Hemisphere harvest kicks in, with prices set to rise further in the meantime.
"The Black Sea is an important region for shipping grains, and if buyers are not able to get grain out of this region, they have to look elsewhere for supplies, which is going to drive prices up further," said Ole Hansen, head of commodity strategy at Saxo Bank.
While some Middle Eastern and African buyers are already seeking alternatives, some importers say they have supplies that could last until November or year-end, before they need to seek larger volumes.
