The collapse of a major dam in southern Ukraine helped send global prices of wheat and corn higher on Tuesday, per the AP. Underscoring the global repercussions on the war, wheat prices jumped 3% after the collapse, apparently on fears that floodwaters would destroy crops. Ukraine and Russia are key global suppliers of wheat, barley, sunflower oil, and other food to Africa, the Middle East, and parts of Asia. It wasn't just wheat: The cost of corn rose more than 1% (to $6.04 a bushel) and oats gained 0.73% ($3.46 per unit).on the Chicago Mercantile Exchange. Prices were even higher earlier in the day, but faded.
“Ukraine has historically been one of the major exporters in the world wheat market,” said Joe Janzen, assistant professor at University of Illinois Urbana-Champaign’s College of Agricultural, Consumer and Environmental Sciences, also pointing to the country's historic corn production. “Anytime there’s news out of that part of the world, the market is sensitive to that." There are massive agricultural fields in southern Ukraine where the dam burst. The collapse has endangered crops in the country’s breadbasket and threatened drinking water supplies, with officials also warning of a looming environmental disaster—pointing to oil escaping from the dam machinery and significant flooding.
Andrey Sizov, managing director of Black Sea agricultural markets research firm SovEcon, said the dam's collapse looked "like a big escalation with dire consequences and huge headline risk.” This "could be just the start of the bull run" on prices, Sizov wrote on Twitter. Ukraine has blamed Russia for blowing up the dam, but Moscow denies it, asserting that Ukraine's own bombs in the region were responsible, per the AP.
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