In a climate charged by geopolitical tensions, U.S. wheat futures experienced a significant mid-day spike.

On Wednesday, July 19, the Russian Ministry of Defense issued a statement. As of 12:00 AM Moscow time on July 20, it would consider all ships sailing to Ukrainian ports in the Black Sea as potential military cargo carriers. The statement was prompted by the termination of agreements for agricultural product exports from Black Sea ports and the closing of maritime humanitarian corridors. It added that the nations whose flags these ships fly would be seen as participants in the Ukraine conflict.

The statement also highlighted that some areas of international waters in the northwestern and southeastern Black Sea have been declared temporarily hazardous for navigation. Relevant warnings about the rescindment of seafarer safety guarantees were issued following established procedures.

Following Russia's warning, during U.S. stock market's morning trading hours, wheat futures' primary contracts traded on the Chicago Board of Trade (CBOT) rapidly increased their gains. At one point, the price surged over $7.3 per bushel, a mid-day rise of approximately 9%. The trend later softened; by the mid-day trading in U.S. stocks, the intraday gain had narrowed to within 8%.

This surge in wheat futures occurred after Russia ceased implementing the Black Sea grain agreement.

On Monday of this week, the Russian President's press secretary, Dmitry Peskov, indicated that the agricultural product export agreement for Black Sea ports was suspended due to parts concerning Russia not being implemented. Following this, CBOT wheat futures once rose more than 4% intraday, but the momentum quickly faded and it turned into a decrease, dropping more than 1% at one point.

As Wall Street Journal mentioned on Monday, analysts have noted that the market was previously aware of the risk of agricultural agreements not being extended upon expiration. Now, speculation abounds that the grain agreement may be temporarily suspended, with hopes for its restart. Xinhua News Agency reported that TASS stated Peskov emphasized that once the parts concerning Russia in the agreement are implemented, Russia will immediately resume the agreement.

However, recent news indicates that after the suspension of the grain agreement, conflicts between Russia and Ukraine in the Black Sea waters have increased, significantly escalating the situation.

Earlier, reports said that Ukrainian authorities claimed that due to the Russian military launching an air raid on the docks and port infrastructure of Odessa and Chornomorsk in the Black Sea early Wednesday morning, the grain trade-related infrastructure of Ukrainian and foreign trading companies was damaged. The day before, the Ukrainian port infrastructure involved in exporting agricultural products from Black Sea ports was also attacked.

According to the Black Sea grain export agreement reached last year between Russia, Ukraine, the United Nations, and Turkey, all parties to the agreement were allowed to export agricultural products worldwide through the "maritime humanitarian corridor" from Ukraine's three major ports: Chornomorsk, Odessa, and the Southern Port.

As Ukraine enters the wheat harvest season, the impediment to grain transport at Black Sea ports undeniably threatens wheat exports.

Media reports point out that several of Ukraine's ports in the Black Sea are vital for the country's grain exports, with most grains being exported through these ports. While Ukraine can still transport via rivers, roads, and railways, these methods are more problematic and costly compared to deep-sea port transportation. Moreover, the closure of the Black Sea corridor may slow down the pace of the next batch of crops entering the market.

Xinhua News previously mentioned that since the execution of the grain export agreement last year, Russia has continuously emphasized that the content of the memorandum has not been fulfilled.

Before formally announcing the cessation of the agreement, Russia recently accused the West of exploiting the agreement to covertly support Ukraine under the guise of humanitarian aid.

Earlier this month, the Russian Ministry of Foreign Affairs issued a statement stating that there was currently no reason to further extend the soon-to-expire agricultural product export agreement for Black Sea ports. The agreement, which aimed to provide food aid to needy countries in Asia, Africa, and Latin America, had turned into a means for Ukraine to commercially export grains to countries with sufficient food supply.

The statement also pointed out that the situation regarding the memorandum signed between Russia and the United Nations on Russia's supply of grains and fertilizers to the world market is still deteriorating. In addition to the United States and the United Kingdom continuously expanding sanctions to limit Russian agricultural exports, the European Union has also introduced a series of sanction measures.