Mike Pearson examines why markets escalated due to news that Russia has officially pulled out of the Black Sea Wheat Initiative last week.

The price of wheat peaked in 2022 with the Ukraine/Russia conflict.

Ukraine has long been known as the bread basket of Europe due to the amount of sunflowers and wheat it produces.

When the invasion began into Ukraine, it was believed the grains would be trapped in Ukraine. However, the agreement in the Black Sea Initiative helped stop the grain from being trapped. Instead, the Black Sea Wheat Initiative was created and it meant Turkey would inspect grain shipments and the grain sales continued.

However, Russia pulled out of the agreement last week.

This sent the markets moving higher on the news because it meant that grain could be trapped in Ukraine again.

By the end of last week, Russia defense said any Ukraine ship will be treated as carrying potential military cargo. And any ships headed towards Ukraine would be considered to be helping them in their defense.

Then Poland kept a ban on Ukraine grain. This meant one more factor that could keep Ukraine’s grain trapped and not able to reach markets.

Now, traders will continue to watch the situation in the Black Sea and the grain markets in the USA. All eyes are on the markets to see if any Ukraine’s customers switch to USA grain.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, a farm broadcaster and host of This Week in Agribusiness.