Wheat prices rise after Ukraine dam collapse

Global wheat prices rose after news of a dam collapse in Ukraine. In addition to the thousands of people at risk from the collapse of the Nova Kakovka Dam, a flood threatens to disrupt grain exports.

Wheat prices rose as much as 3 percent on Tuesday, but later fell slightly. The destruction of the dam, possibly due to explosions, appears to be “a strong expansion with severe consequences,” according to Andrey Sizov, director of grain consultancy SovEcon. For instance, he wrote in a tweet that the news could push up grain prices sharply.

Wheat prices fell to a two-year low last week on hopes of a Ukraine-Russia grain deal that would allow the eastern European country to export agricultural products through Black Sea ports. Ukraine is one of the largest exporters of grains such as wheat and maize.

But prices are rising again due to concerns about weather conditions faced by grain farmers in other parts of the world. For example, the Australian Department of Agriculture expects the wheat harvest to fall by a third due to continued drought. Argentina and the United States are also threatened with no rainfall. In China’s Henan province, heavy rainfall has hampered the harvest, meaning China may have to import more wheat.