Wheat futures rose, paring a weekly loss, after a major Russian grain-shipping hub was temporarily closed. 

Traffic from Novorossiysk port was halted for several hours on Friday after a Ukrainian drone attack on a naval vessel. The overnight assault was repelled without damage to port facilities, according to the Russian Defense Ministry. 

Although the closure was short-lived, it adds to uncertainty about Black Sea trade flows as the war escalates in the midst of this year’s harvests. Russia is the world’s top wheat shipper, and its farmers are collecting a second bumper crop. 

Chicago futures climbed as much as 3.5%, before paring the advance. Prices have been increasingly volatile after Russia attacked Ukrainian sea and river ports following its withdrawal from the agreement to allow Ukrainian crop shipments through the Black Sea last month.

Eoin Treacy's view

Ukraine’s supporters and military donors fervently hope the country can continue to mount a stout defence, but they are cautious about the potential for escalation. However, the nature of war is tit-for-tat attacks that seek to deprive adversaries of the tools necessary to persist in resistance.

Ukraine sends drones to attack Moscow and has bombed the bridge to Crimea. Russia has taken possession of Ukraine’s largest nuclear reactors and is bombing grain export terminals. Ukraine’s efforts to disrupt Russia’s grain exports were all too predictable and there is no sign the pattern of escalation is about to stop.

Wheat futures initially found support today in the region of the July lows but failed to hold the rebound. With a contango and ample stocks a significant supply shock will be required to stoke demand. This pattern of volatile trading suggests supply and demand are coming back into balance in the region of the upper side of the base formation.