Agriculture Funds Soar After Russia Scraps Grain Deal with Ukraine, Shaking World Food Markets

The termination of the Black Sea grain agreement by Russia may engender profound repercussions in the world food market, with growing fears that price surges in principal commodities such as wheat and corn could thrust tens of millions of people into potential famine. This now defunct agreement, originally brokered by the United Nations and Turkey, facilitated secure maritime transportation of Ukrainian grain and, as such, was aligned with the zero hunger UN Sustainable Development Goal (SDG #2). It allowed for the export of almost 33 million metric tons of food through Ukrainian ports, according to UN data. Before the war, the country was the 5th largest wheat exporter, accounting for almost 10% of exports.

Russia's full-scale invasion of Ukraine in February 2022 saw wheat prices surge from $8 per bushel to more than $12. They then significantly and continuously dropped by more than 50% from the all-time high hit in March 2022 to a low of $6.35 at the end of May. Prices have since recovered, hitting the $7.50 level amid more intense fighting and heightened tensions. Ukraine’s Agriculture Ministry said on Wednesday that recent Russian attacks had “destroyed 60,000 tons of grain, in the port of Chornomorsk, outside Odesa.”

Against this gloomy backdrop, agricultural funds have demonstrated strong growth, with a weekly gain of +4.38%. More specifically, the WisdomTree Wheat (WEAT) and the WisdomTree Grains (AIGG) gained +6.51% and +4.56% week-over-week, bringing their year-to-date performance to -17.79% and -4.62% respectively.

Group Data

Funds Specific Data:AIGA,WEAT,AIGG