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The escalation of fighting in the Black Sea between Russia and Ukraine has been no secret to the grain trade for weeks, but a devastating overnight drone attack by Ukrainian forces on the port of Novorossiysk grabbed the world’s attention on Wednesday, damaging Russian grain terminals and sparking a wheat-led rally (see item below) in the markets.
“The Black Sea, with its trade routes channeling both Russian and Ukrainian exports through the Bosporus to the rest of the world, has been a critical lever in the war before,” noted a report by the Wall Street Journal. “Russia repeatedly struck Ukrainian ports in 2023, slowing grain exports. The difference this time is that Ukraine can hit back.”
A major grain trading company confirmed to Russia’s TASS news agency that its terminal had been hit, while another told Reuters and Russian outlet RBK the same, the BBC reported. It said the Russian agriculture ministry announced on Wednesday that it was working to redirect cargo flows to ports in the Baltic and Caspian Seas as well as land routes. It did not make any reference to Ukraine’s attacks but said it was “taking into account current logistical constraints”
- “Damage to NZT is limited, while the grain loading gallery collapsed at NKHP – this is big and could require months of repairs,” wrote Andrey Sizov, CEO of the SovEcon consulting firm, in an X post. “For now, only one of three terminals is operating at the port.”
Meanwhile, Russian drones and missiles have struck 57 vessels since June 20, most carrying other countries’ flags, killing at least 21 people, the Journal reported, citing the Odesa region’s prosecutor’s office in Ukraine. “We’re currently in a situation similar to the one we faced around 2023, when our grain corridor collapsed. It’s very similar in terms of sentiment, market behavior, and the way it’s all unfolding,” Serhiy Vovk, director of Ukraine’s Center for Transport Strategies, told the newspaper.
USDA in its World Agricultural Supply and Demand Estimates Wednesday lowered Russian and Ukraine wheat exports for 2026-27 due to logistical concerns. Russia was lowered to 46 million metric tons from 47.5 MMT in July; Ukraine was reduced to 13.5 MMT from 14.5 MMT.
Market recap: The August USDA reports offered another upside acreage surprise but a yield estimate toward the low end of expectations, crop problems elsewhere in the world, a tightening bottleneck in the Black Sea and a strong demand outlook made for a price-friendly corn picture, with both old- and new-crop ending stocks coming in below expectations. December corn rose 20 ¼ cents to end at $4.80 ¾, hitting a two-week high.
- November soybeans rose 14 ½ cents to end at $11.83 ¼, also hitting a two week high. USDA’s first survey-based soybean estimate increased 44 million bu. from July and was 41 million bu. higher than analysts expected. Yields are expected to average 52.7 bushels per acre, down 0.3 bushels from 2025. Crush is seen continuing to run strong.
- Wheat: September soft red winter wheat rallied 22 ½ cents to $6.52 ¾, a two-week high. Winter wheat futures had jumped overnight on apparent short covering in response to the attack on Russian grain facilities.
- December cotton lost 1 point to 84.38 cents, feeling pressure after a smaller-than-expected cut to production but bouncing back as grains extended their rally.
- October live cattle fell $2.525 to $223.80, nearer the daily low. September feeder cattle lost $5.90 to $339.35, nearer the daily low and hit a two-week low.
- October lean hog futures gained $0.225 to $83.55 The cash hog market is still trending down, which may limit further upside in futures in the near term.
CPI matches expectations: While commodity traders parsed the USDA data, financial markets were also digesting the most important economic data of the month: the July consumer price index. The headline figures matched Wall Street expectations across the board. CPI rose 0.1% in July for a year-over-year rise of 3.4%, slowing from 3.5% in June. Core CPI, which strips out food and energy prices, rose 0.2% on the month and 3.4% year over year, down from 3.5% in June.
Fed-funds futures traders slightly pared bets for a September rate hike, pricing in a probability of around 44% versus 48% on Tuesday. Expectations for a September move had been dented after an unexpectedly weak July jobs report last week. Economists said the data won’t settle the rate-hike debate. Policy makers fearful the Iran war and other factors could lead to an inflationary surge likely didn’t change their minds, while those in the wait-and-see camp likely also feel justified. Note: the drop in the headline rate was helped by a 2.9% monthly drop in gasoline prices, which is likely to be partly unwound this month. The producer price index for July, which will provide a look at inflationary pressures in the wholesale pipeline, is set for release Thursday.
- Beef prices see fall: Beef prices – an obsession for the White House amid worries over affordability in the runup to this fall’s midterm elections – saw a fall. The CPI data showed uncooked beef and veal prices declined 0.8% last month, leaving them 9.4% higher year over year. Uncooked ground beef fell 1.6% in July, the largest monthly drop since September 2020, and was up 0% year over year.
The cyclospora outbreak took a toll on lettuce prices, which plummeted 16.4% last month, the Labor Department said.
Best lease for landlords: Research shows that over a 20-year period, no single farmland lease type consistently outperformed others, said Michael Langemeier of the Purdue University Center for Commercial Agriculture in an AgBrief video. While average long-run net returns to land across fixed cash rent, crop share, and flexible cash rent were surprisingly similar, annual returns varied by over $100 per acre depending on market conditions. Langemeier offered the following breakdown:
- Fixed Cash Rent: Delivers maximum stability and predictable cash flow, making it particularly attractive during tight margin periods.
- Crop Share: Amplifies market cycles. It lagged fixed cash rent by ~$70/acre from 2013–2019, but surged up to $74/acre higher during strong markets (2020–2022).
- Flexible Cash Rent: Functions as a hybrid. Bonus payments triggered in only 11 of 20 years (averaging $35/acre), capturing upside in high-revenue years while partially smoothing downside risk.
“Over the long run, no single lease arrangement consistently dominates, but in the short run, market conditions determine which structure performs best,” Langemeier said. “The real decision comes down to this. Do you want stability in your land income or flexibility to capture upside when markets move?”
Delayed El Niño impact on palm oil output: Malaysia’s SD Guthrie, one of the world’s largest palm oil producers, said on Tuesday that it expects production to be impacted in 2027 and 2028 with El Niño set to bring drier and hotter weather, according to a Reuters report. The company expects production for the rest of 2026 to be largely unaffected by El Niño, with the impact of the weather phenomenon expected to follow a 12-month lag, CEO Mohd Haris Mohd Arshad said at a news conference.
Production for the rest of 2026 is expected to remain largely unaffected by El Niño, as its effects are not felt immediately but instead follow a 12-to-16-month lag, Chief Executive Officer Mohd Haris Mohd Arshad said at a press conference.
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