War and extreme weather have disrupted supply, with the Bloomberg Agricultural Spot Index rising over 13% in August, marking the largest monthly increase since July 2012. Grains and soft commodities strengthened simultaneously, with corn, wheat, sugar, cocoa, and cotton all recording double-digit increases.

Attacks on Black Sea ports have slowed grain exports from Russia and Ukraine. Chicago wheat has risen to a three-year high, with an approximate increase of 18% in August, and at one point surged over 12% within a week. Russia and Ukraine together account for about a quarter of global wheat production and nearly a third of exports.

Export channels have been thinned. Loading and unloading at deep-water docks near Odessa are nearly at a standstill, and ports like Novorossiysk have been repeatedly attacked. Russia's grain export expectations for August are just slightly above 2 million tons, compared to a five-year average of about 5.7 million tons. Ships, grain silos, and cargo vessels have become targets, causing freight rates to multiply in the short term.

Sugar and cocoa have risen by about 20%. Concerns over El Niño combined with weather in producing regions have pushed soft commodities to their strongest monthly performance in about 12 years. The International Grains Council has lowered its wheat production forecast for the 2026-2027 period, citing ongoing high temperatures in Europe.

Importing countries have begun to adjust prices. Buyers like Egypt, which heavily rely on Black Sea sources, have seen Jordan cancel tenders, and Asian processors are worried about delays in arrivals from July to September. Prices for alternative sources like Australia are significantly higher than those for goods trapped in the Black Sea.

In market mechanisms, the buyers are flour mills, feed mills, and importing countries that must replenish stocks, while the sellers are wheat stuck at ports and sugar and cocoa with reduced production expectations. The events are driven by port standstills and weather, with funds flowing from consumer country procurement budgets to Chicago and London futures; benefiting are the producing regions that can still load ships and traders holding inventory, while North Africa, the Middle East, and Asia face pressure from food inflation and household grocery costs.

Source: Public Information