East Anglia's grain traders face frenzied day as invasion sparks new wheat price highs

A combine harvester at work

The invasion of Ukraine has sent wheat prices rocketing as its ports close - Credit: Getty Images/Cultura RF

The Russian invasion of Ukraine has sent wheat prices rocketing to new highs as uncertainty stalks the commodities markets.

Grain traders across East Anglia were left reeling as standard feed wheat prices soared by £16/t on the day of the invasion - on top of £8 on the eve of the Russian advance. "Grain prices have absolutely flown through the roof," said grain trader Ben Schadla-Hall. "We have not had a chance to catch a breath yet. Phones have been ringing off the hook - it's pretty insane."

Grain trader Ben Schadla-Hall of Dewing Grain

Grain trader Ben Schadla-Hall of Dewing Grain - Credit: Dewing Grain/Ben Schadla-Hall

Matthew Jewers, managing director of Jewers of Woolpit, said people were delaying wheat purchases as they waited for things to settle down. "I don't know anybody is particularly buying at the moment. I have been saying to growers let's look at it Monday or Tuesday because the volatility is huge and nobody knows where it's going."

Mr Schadla-Hall, of Norfolk and Suffolk grain marketing specialists Dewing Grain, based at Aylsham, said the state of the market - sparked by the invasion - was unprecedented.

Ukraine is a major wheat-producing region - with its crop heading around the world from ports such as the Black Sea port of Odessa and the Azov Sea port of Maripol, he explained. It was the cheapest wheat in the world, he added.

Together, Russia and Ukraine are said to account for about 29% of global wheat exports - as well as 19% of world maize exports.

"Normally futures wheat will go up or down £1 in a day, so a £16 rise in a day is phenomenal. The most we saw was back in 2012 when Russia had an all-out drought and Putin cancelled all exports and prices went up £20 in a day," he said.

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"We are seeing pretty unprecedented price rises on the back of what can best be described as fear in the commodity markets."

Ex-farm feed wheat for May 2022 was going to be around £235/t, he said. Last week it was about £210/t. The last market high was in November 2021 when it was trading at £220.

Wheat growing in an East Anglian field this season

Wheat prices hit up to £235/t following the invasion of Ukraine - Credit: Sonya Duncan

But while farmers might benefit from wheat price rises, these will be accompanied by huge increases in fertiliser and fuel costs, he said, while livestock farmers would see rises in animal prices but these would take longer to filter through, he predicted.

"Markets tend to trade to the extreme early on then as more information comes in they get a better idea of how things are affected. They have been rocketing up because everybody has gone for the fear factor.

"It's very hard to second-guess Vladimir Putin but depending on what sanctions are put on him you could see Russia just selling wheat to China and that leaves the US to market to the rest of the globe," he said.

"We are almost in an untradeable market because the volatility is so great."

Mr Jewers explained that Russia and Ukraine were both very large grain producers - particularly in wheat - and normally produce a surplus to their domestic requirements - exporting the balance around the world.

Matthew Jewers of Jewers

Matthew Jewers, the fifth generation of the same family to run Jewers of Woolpit which stores, processes and trades grain - Credit: Gregg Brown

"This war places in doubt the availability of that wheat coming onto the international market and therefore disrupts the supply and demand dynamics," he said.

"Coming, as it has, on the back of a poor crop production year for many areas, prices are extremely volatile with large increases of nearly 10% occurring today.

"These prices are shown on the grain futures market and may not necessarily reflect what is happening domestically immediately but they will show the trend for a farmer seller."

Barry Howard, commercial manager at Fram Farmers, said wheat prices started their move higher in mid to late January following the build-up of Russian troops on the Ukrainian border and have moved sharply higher this week as the situation  developed into a full blown invasion.

Barry Howard, commercial manager at Fram Farmers

Barry Howard, commercial manager at Fram Farmers, said any disruption to wheat supplies would be keenly felt - Credit: Fram Farmers

"This conflict will have a significant impact on grain prices as the Russian and Ukraine combined now account for 29% of global wheat exports, compared with 14% in 2014 when Russia annexed Crimea. Ukraine is also responsible for 16% of global maize export," he explained.

"With wheat stocks in major exporting countries already at low levels, and ongoing droughts reducing maize availability in South America, any disruption to supply will more keenly felt.

"At the time of writing, there are reports of the suspension of ship movements in the Azov Sea together with shelling in the Odessa region which contains key Black Sea ports.

"Russia and Ukraine will also account for 78% of global sunflower oil exports this season and if supplies are disrupted, buyers may switch to alternatives vegetable oils which will support rapeseed prices.”