The battle between Russia and Ukraine has flared up again in recent days. Russia attacked southern Ukraine with drones and Ukraine launched missiles that failed to escape unscathed by a Russian warship from the Black Sea fleet. In addition, shipowners are avoiding the Suez Canal and the Red Sea due to attacks by Houthi rebels. A bright spot in all the transport problems is the US, where trains to Mexico are running again.
The Matif was closed on Monday and Tuesday for Christmas. In the US they don't celebrate Boxing Day, so the CBoT was open yesterday. Wheat jumped higher last trading session, rising 3,2% to $6.36¼ per bushel. Corn and soy were also on the rise, but were slower than wheat. Corn added 1,5% to $4.80¼ and soy rose 1% to $13.13¼ per bushel.
Uncertainty about safety on key shipping routes between Europe and Asia buoyed wheat. The Ukrainian army downed dozens of Russian drones in the early hours of December 25, including in the Odessa region. A day later, Ukraine launched an attack on the Crimean peninsula. According to Ukrainian media, the Russian naval ship Novocherkassk was destroyed. Russian media confirm that the Black Sea Fleet ship has been damaged, but do not comment on the extent of the damage. The escalating conflict between Ukraine and Russia is raising concerns about the safety of the Black Sea routes.
Mission does not bring back peace on the Red Sea
It is not only the Black Sea that is turbulent. Ships are not safe on the Red Sea either. Here it is Houthi rebels - supported by Iran - who attack ships linked to Israel. The Red Sea is an important route between Europe and East Africa and even more importantly Asia, via the Suez Canal. It is mainly the container rates and prices for oil transport that are making the news now that the Cape of Good Hope has to be rounded again, but there are also consequences for world trade in wheat and corn in particular, according to various sources. The EU, Ukraine and Russia export serious volumes of grain to the Middle East and Asia.
Last week, a US-led mission was announced under the name Operation Prosperity Guardian in which participating countries, including the Netherlands, will patrol the Red Sea. Yet most shipowners still choose to sail, writes Reuters. Only Maersk announced last Sunday that it had plans to resume shipping across the Red Sea.
The US-Mexico border is open again
The two railroad border crossings between the US and Mexico opened last Friday after being closed for five days. The decision to close the crossings was made to free up personnel to guard the border where the US has problems with large illegal migration from Mexico. This angered American corn and soy growers and Mexican livestock farmers, among others. American and Mexican farmers' interest groups reacted with relief. “The lack of supplies in Mexico – caused by the closures – increased production costs and endangered our country's food security,” Mexico's CNA wrote. To catch up on the backlog, the border crossing will be set up 24 hours a day for exporters for a few days, the White House reports.