At-a-glance
  • Russia-Ukraine tension underpins prices for Black Sea wheat
  • U.S. hard red winter wheat has fallen 15% since Nov peak, Black Sea wheat is off 3.5%
  • Russia/Ukraine wheat exports are three times that of U.S. wheat exports

Heightened geopolitical tension in the Black Sea region has impacted pricing in agricultural markets in a variety of ways.  The most obvious is that security concerns along the Russia-Ukraine border may have raised the cost of wheat globally, particularly for Black Sea wheat.  After rising substantially in the summer and early fall, prices for U.S. hard red winter wheat (HRW) peaked on November 23.  Since then, prices have fallen by nearly 15%, while Australian wheat prices are 6% off their recent highs.  By contrast, the price of Black Sea wheat has fallen by only 3.5% over the same period (Figure 1).

Figure 1: Black Sea wheat prices remain high amid tension

Comparing the different wheat benchmarks is one way of assessing the price impact of the tension in the Black Sea region; cross-commodity comparisons are another.  The Black Sea region is especially important to global wheat production, with exports from Russia and Ukraine amounting to 7.5% of global wheat production, three times higher than U.S. exports (Figure 2).  The Black Sea region is also important in the corn market, where its exports amount to just over 3% of global production as the world’s third largest exporter behind the U.S. and South America, whose exports account for 5.0% and 6.6% of global production, respectively (Figure 3).  By contrast, the Black Sea region is a minor producer of soybeans, where its exports amount to just 0.3% of global soybean production, compared to 15% for the U.S. and 25% for South America (Figure 4).  

Figure 2: Black Sea exports dominate the global wheat market

Figure 3: Black Sea corn exports are important but less so than those from the Americas

Figure 4: The Black Sea region is only a minor exporter of soybeans

The impact of geopolitical tension is most apparent in the wheat market where Black Sea exports assume the largest role.  The wheat futures curve is in contango – wheat for delivery in March 2023 is priced higher than wheat for delivery in March 2022.  By contrast, in the soybean market, where Black Sea production plays a secondary role, the curve is in a steep backwardation, with soybeans for March 2023 delivery about 7% lower than soybeans for March 2022 delivery.  The corn market is in the middle:  Black Sea production is less important for corn than for wheat, but more important than for soybeans.  Indeed, the corn futures curve is in backwardation but is relatively flat compared to the soybean curve (Figure 5).

Figure 5: The less Black Sea production matters, the greater the backwardation

If any possible supply disruptions dissipate from the region along with the tensions, wheat prices might decline globally in response, and Black Sea wheat prices could face more pressure than other benchmarks.  

If Black Sea tensions dissipate, wheat prices might fall globally in response and Black Sea prices could have further to fall than other benchmarks.  By contrast, the opposite might occur should the situation escalate further.

Wheat Futures and Options

Chicago Wheat and KC Wheat are the global industry standards for price risk management, while newer Black Sea Wheat and Australian Wheat contracts provide price discovery and trading opportunities on emerging grain markets around the world.


All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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