Wheat surged after an escalation in fighting between Russia and Ukraine, including the destruction of a giant dam and damage to an ammonia pipeline that Russia sees as key in talks about maintaining the flow of Ukrainian grain shipments through the Black Sea.
(Bloomberg) — Wheat surged after an escalation in fighting between Russia and Ukraine, including the destruction of a giant dam and damage to an ammonia pipeline that Russia sees as key in talks about maintaining the flow of Ukrainian grain shipments through the Black Sea.
Ukraine said Russia blew up the dam in the country’s south, unleashing a torrent of water that threatens residents and complicates the battlefield separating the two armies along the Dnipro river. The dam is some way from the three Ukrainian ports covered under the Black Sea grain deal, but the flooding poses a severe risk to people, transport and logistics.
The dam’s destruction “looks like a big escalation with dire consequences and huge headline risk,” Andrey Sizov, managing director at agricultural consultant SovEcon, said in a tweet. “This could be just the start of the bull run.”
Wheat futures in Chicago surged as much as 3% on Tuesday, extending their climb from a 30-month low. Corn increased more than 1%.
More than 80 settlements and Kherson city lie within the flood zone “which could lead to hundreds of thousands of victims,” Ukrainian Deputy Infrastructure Minister Mustafa Nayyem said on Twitter. The hydro power station built in 1956 provides electricity to more than 3 million people and is a “crucial part of the country’s energy infrastructure,” he said.
Separately, Ukraine reported that an ammonia pipeline was damaged by Russian shelling in the Kharkiv region close to the border between the two countries. Russia regards the pipeline, which was shut down during the war, as key in talks on keeping Ukraine shipments flowing through the Black Sea.
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