Early this week, Russia officially pulled out of the Black Sea grain deal with Ukraine that had been brokered by the U.N. nearly one year ago. The ending of the deal wasn’t a surprise, but what happened in the 48 hours following raised some eyebrows. On Monday, the Kerch Bridge connecting Crimea to the Russian mainland was attacked for the second time since the war began, with Ukraine claiming responsibility. Russia retaliated with several missile strikes launched into Ukraine inflicting damage to key grain terminals/port infrastructure in the cities of Odessa and further down the Black Sea coast in Chornomorsk, two of the three ports that were included in the export deal. Following the attacks, reports circulated that Russian warships were en route to Ukraine and that any ships approaching Ukraine would be considered a military threat. Not to be outdone, Ukraine verbalized their own maritime threat, claiming they would target ships headed toward Russia. Market volatility thrived in this headline-driven week with wheat futures climbing throughout the week, reaching limit-up at one point on Wednesday before backing off at the end of the week. Prior to the war, Ukraine had been the third-largest exporter of corn and fifth-largest exporter of wheat in the world. Their export role was reduced over the last year, and it looks to be further reduced in light of recent events.
Crude Oil Keeps its Promise
Last week, October Crude oil futures were able to get above the 200-day moving average, reaching a high of $76.84/brl. The next two trading sessions saw a decrease in prices that took it below the 200-day moving average for one day, but a quick rebound got it back above this level and now gives the bulls more leverage to try and make a run at the $80/brl mark. This would be the high end of the range for the year, and a key target price that could challenge the OPEC nation’s resolve in keeping oil production cuts in place.
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