US top diplomat in Kyiv as Russian wargames add to wheat price spike
The US’s most senior diplomat was in Kyiv Wednesday to hold talks updating Ukrainian president Volodymyr Zelenskyy on high-level talks between Russia on one-side, and representatives of the US-led military organisation NATO.
The visit coincided with a surge in wheat prices, with traders citing cold weather across the US and the escalation in tensions driving US and European wheat futures higher.
US Secretary of State Anthony Blinken had represented the US government at talks held in Vienna, Geneva and Brussels last week aimed at defusing escalating tensions along the border with Ukraine, amid Russian fears that the country is pushing to join the alliance.
Russian president Vladimir Putin has complained of Russia’s interests being threatened by the military bloc’s creeping influence across former Soviet states and has ratcheted up pressure by deploying tens of thousands of military personnel along the eastern border with Ukraine.
Military forces have also been deployed into the disputed region of Crimea, while military exercises started this week involving Russian forces in Belarus mean there is now a sizeable Russian military presence on three fronts around Ukraine - some potentially within range of Kyiv.
The tensions have raised temperatures in one of the world’s biggest agricultural exporting regions, with Ukraine a major corn exporter while much of the world’s wheat supply flows from Russian ports via the Black Sea to the world market.
Speaking through an interpreter, President Zelenskyy emphasised the constant contact between US and Ukrainian government and made a simple plea for help, “especially help in such times, difficult times – I think these times can be called difficult.”
In response Secretary Blinken addressed reports that upwards of 100,000 Russian troops were near Ukraine’s border and described the threat to the country as “unprecedented”.
“We’ve made it very clear to Moscow that if it chooses to renew aggression against Ukraine, it will mean that it will face very severe consequences,” Blinken said during a press conference.
A later press release from the State Department went further in its language.
“In light of Russia’s ongoing and unprovoked military build-up in and around Ukraine, Secretary Blinken emphasized again that if Russia chooses the path of further aggression… [the US] will impose crippling costs on Russia’s economy,” a statement from State Department spokesperson Ned Price said.
World wheat prices posted double digit gains through Wednesday amid the renewed tensions, with Kansas hard red wheat futures posting gains of around 3.4% through the day, surpassing the $8/bu level, while Chicago soft red wheat was up 3.5%.
Euronext French milling wheat futures also experienced a sharp rise, with the March contract €7/mt up at €274.75/mt, some 2.6% higher.
USDA data shows that 30% of world wheat exports and 31% of world barley exports come from Ukraine or Russia, while 78% of the world’s supply of sunoil and 81% of sunmeal originate from the Black Sea.