Global wheat buyers face rising import costs as Black Sea supplies tighten

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Global wheat import costs rise

Highlights

Chicago wheat futures have surged 40% from June lows to a three-and-a-half-year high due to Black Sea shipping disruptions stalling Russian and Ukrainian exports.
Kpler estimates Russian wheat exports will drop to 1 million tons in September from 5 million tons a year ago, while Ukraine's exports are halved YoY to 1 million tons.
Asian and Egyptian buyers face cost pressures—Indonesian millers are paying 20%-25% more for Australian wheat, and Romanian wheat is quoted at $340/ton C&F to Southeast Asia.

Black Sea disruption lifts prices and delays buying

As reported by Reuters, attacks on vessels and port infrastructure have slowed grain cargo movements from Russia and Ukraine to a near standstill since July, making it harder for buyers that rely on the Black Sea region to secure wheat supplies.

The disruption is driving a sharp market rally. Benchmark Chicago wheat futures are up 40% from June lows to a three-and-a-half-year high, while physical prices from other exporting regions are also rising. Traders and millers say many importers have postponed alternative purchases for months in the hope that Russia and Ukraine would reach an agreement to resume grain flows, but local inventories are now running low.

Ole Hansen, head of commodity strategy at Saxo Bank, says buyers unable to source grain from the Black Sea have little choice but to turn elsewhere, a shift that is likely to push prices higher still. Kpler estimates Russian wheat exports are on track to fall to about 1 million tons in September from 5 million tons a year earlier, while Ukraine is expected to ship about 1 million tons this month, roughly half the level of last September.

Asia and Egypt seek alternatives under cost pressure

Asia is facing the most immediate impact. Kpler analyst Ishan Bhanu says very few vessels are entering to load in the Black Sea, and most of the limited exports leaving Russia and Ukraine are going to buyers in the Middle East and Africa rather than Asia. Indonesia, the world's No. 2 wheat importer, has received only about 60,000 tons from the Black Sea this month, down from about 500,000 tons in September last year.

Indonesian millers are switching to suppliers such as Argentina and paying around 20% to 25% more for Australian wheat than they previously paid for Black Sea cargoes, traders say. Some buyers are booking bulk cargoes from Australia and Argentina, while others are relying on smaller container shipments to manage near-term shortages. A senior executive at a Southeast Asian milling company says the business is avoiding bulk purchases because higher wheat costs cannot be fully passed on to flour buyers.

Romanian Black Sea wheat is quoted at about $340 per ton C&F to Southeast Asia, while Australian Premium White wheat is around $345 per ton for October shipment, roughly 25% above levels seen before the shipping crisis. In Egypt, official data show wheat imports in the first half of September fall to 143,870 tons from 876,139 tons a year earlier. Supply Minister Sherif Farouk says Egypt is turning to France and other European suppliers, although some local buyers are still hesitant to shift away from familiar Russian and Ukrainian grades. Alexandria-based trader Hesham Soliman says many Egyptian mills are operating at 30% capacity as they wait to see whether restored Black Sea shipping could trigger a price drop of $50 to $60 per ton.

Our earlier article on Ukraine’s financing push highlighted Kyiv’s efforts to secure large-scale international support to keep public finances and the economy stable as the war with Russia drags on. It noted that Ukraine is seeking IMF-backed help to cover sizable funding needs for 2025 and beyond, amid intensified attacks that are weighing on business activity and government operations.

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