Wheat prices popped near a one-year high on Friday after Russia announced that it was going to limit grain exports through June due to concerns that the coronavirus was creating food shortages in Russia.
Russia is the world’s largest wheat exporter; limiting its supply will push more foreign demand to other major exporters like the United States, Canada, and France. U.S. wheat exports have been strong so far this year, and this move will likely cut further into domestic supplies.
In less than two weeks, prices have risen by more than 80 cents per bushel, welcome relief for U.S. wheat farmers desperate to raise some dough. As of midday Friday, May Chicago wheat futures were worth $5.73 per bushel, while Kansas City wheat traded for $4.91.
Meanwhile, corn prices are languishing near $3.45 per bushel as a result of lower ethanol demand. As U.S. drivers limit mileage and low oil prices keep fuel costs low, ethanol supplies are rising sharply, causing ethanol plants to close down or reduce capacity.
As the coronavirus spread limits economic activity and trade, there may be more supply disruptions, leaving food and goods trapped in a producing area and unable to reach demand areas. As the global food and supply chain has become increasingly complex, these interruptions warrant close watching.