Wheat prices surge as Russia suspends the Ukrainian grains deal
Wheat prices rallied on Monday as Russia suspended the deal that allows Ukrainian export of grains through the Black Sea.
Corn and soybean prices rose as well due to the developments, which will hurt availability and will impose increased costs.
Global Grain Prices
Wheat prices at the Chicago Exchange rose 8% to $8.9325 a bushel, a three-week high, while yellow corn prices rose 2.85%, as Soybean prices rose 2.25%, and soybean oil rose 3%.
Russian Decision
Russia announced on Saturday the suspension of the Ukrainian grains export deal through the Black Sea, accusing Ukrainian aeroplanes of attacking the Russian fleet in the Crimean Peninsula.
Both Russia and Ukraine signed a deal on July 22 with support from the UN to reopen Ukrainian ports on the Black Sea for grains export in an attempt to alleviate the global shortages.
However Russia officially told the UN the deal is suspended "indefinitely", and it won't guarantee the safety of civil ships going through the Black Sea under such a deal.
A Worsening Crisis
No doubt, the decision will cause yet another spike in food prices and shortages worldwide, given in mind that since the deal was signed in July, over 9 million tones of wheat, corn, barley, soybeans and other agricultural products were exported from Ukraine.
Western Condemnation
US President and other western figures condemned the Russian decision and its impact on food safety for many countries.
As for prices, analysts expect further volatility in the global grains market until more news come out of the Black Sea.
Europe's consumer prices surge to new record highs
Europe's consumer prices rallied 10.7% in October, the highest ever on record, above 9.9% in September, and above estimates of 9.9%.
Core prices, excluding food and energy, rose 5% this month, above estimates of 4.8%, and up from 4.8% last month.
Gold on track for seventh monthly loss in row
Gold prices fell in European trade for the third straight session for the third straight session, plumbing two-week lows as the dollar climbed against a basket of major rivals before the Federal Reserve's meeting.
The precious metal is heading for the seventh monthly loss in a row, the longest such streak of monthly losses ever as global central banks continue their aggressive policy tightening and rate hikes to control record inflation.
Prices Today
Gold prices fell over 0.4% to $1,636 an ounce, a two-week low, with an intraday high at $1,645, after losing 1.15% on Friday under pressure from the greenback.
The Dollar
The dollar index fell 0.5% on Monday for the third straight session against a basket of major rivals, pressuring gold and other dollar-denominated commodities.
The dollar is boosted as analysts expect the Federal Reserve to increase interest rates this week for the fourth time in a row by 0.75% to 4%, the highest since December 2007.
The bank is convening its periodic policy meeting tomorrow, expected to issue more clues about futures steps, with many major financial institutions expecting a final interest rate of 5% by the end of the first quarter in 2023.
Monthly Trades
Gold prices are down 1.5% so far in October, on track for the seventh monthly loss in a row, the longest such streak of losses.
Central Banks
Central banks continue to move strongly to control inflation and prices through aggressive policy tightening and interest rate hikes.
Higher interest rates naturally hurt demand on non-yielding gold.
SPDR
Gold holdings at the SPDR Gold Trust fell 2.61 tones yesterday, for the second day in a row, to a total of 922.59 tones, the lowest since March 2020.