Last week nobody was talking about Yevgeny Prigozhin and his Private Military Company, Wagner. This week saw grain markets trading higher after the armored convoy of mercenaries marched 400 miles into Russia, stopping only 125 miles from Moscow.  

The massive convoy full of ex-special forces soldiers, tanks and armored vehicles rolled largely unopposed through military checkpoints and blockades. The convoy shot down seven Russian aircrafts before a ceasefire could be negotiated.

Nobody expects a 25,000-strong private army to leave the frontlines of a war and march hundreds of miles toward the Kremlin. The catalyst to the weekend’s events was when Wagner forces were hit by Russian missiles. But tensions had reached a boiling point.

What does this have to do with grain markets? Volatility.

Chicago wheat futures are nearing a 29% monthly gain, the most since 2015. Wheat prices have tumbled since the Ukraine-Russia war started over a year ago, but rose sharply in response to the “Russian Tension.”

When you sit down and discuss your marketing plan, you aren’t discussing the likelihood of a mini coup taking place on the other side of the globe. But it could happen, and if so would have a big impact on grain prices. Grain marketing isn’t just about production and weather. Geopolitics play a big role, and the Ukraine-Russia war is one of the biggest factors, both positive and negative.

That armed uprising – even if it’s just a threat – brings further uncertainty to the future of grain shipments coming out of the Black Sea.

The market has grown complacent with the Russian-Ukrainian war, and wheat prices have dropped significantly. Last weekend’s mutiny brought back concerns over Russian political risk. Recently Russia has threatened to pull out of the Black Sea Grains Initiative, which is up for renewal next month. Reaching a deal will likely be even slower if we see a new leader in Russia.

Prigozhin, Wagner’s leader, tarnished Putin’s strongman image after a near coup in Moscow. Putin’s authority is being questioned, with Prigozhin being the first person in 20 years to challenge him since he took office.

All this volatility is coming as the Russians are set to harvest what should be a large wheat crop. Now the markets must decide how credible the threat is to Russian leadership and what that means for Russian wheat exports. 

The level of uncertainty is exceptionally high right now. And as I talk to farmers, I hear a lot of frustration and hesitation over how to handle a grain market that can swing 25 cents in a day. And it has done this to the upside and the downside.

Things can get stressful if you don’t have a solid plan. If you want to remove this stress and sleep better at night, then find a trusted advisor who can help you come up with a plan that will help minimize the guesswork and the risk.

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