RUSSIA has pulled out of the Black Sea grain transport arrangement allowing for safe passage of ships in the important freight corridor causing renewed concerns about global availability of grain.
Early December wheat futures markets on the critical Chicago Board of Trade futures exchange following the news of Russia's exit from the deal saw prices soar by US48 cents a bushel, or 5.8 per cent, up to US877c/bu, with prices continuing to firm throughout the session.
The maximum price rise in a single day's trading for the wheat futures contract is US70c/bu a day.
Reuters reported this morning that the United Nations, Turkey and Ukraine would continue to push ahead with the freight corridor without Russia's participation, but the market now has significant fears as to whether Ukrainian grain products will be able to find a path out of the region.
The Black Sea deal had been running relatively successfully since it was established in July with over 9.5 million tonnes of critical Ukrainian grain supplies sent to nations struggling with food security issues as a result of the lack of access to grain out of the Black Sea region due to the Ukraine / Russia conflict.
Russia's rationale for pulling out of the deal was that it had been under attack from Ukrainian drones has been savaged by officials from other countries, including the US.
Many analysts have suggested the drone explanation gives Russia the excuse it needed to pull out of the deal.
Commonwealth Bank commodity analyst Tobin Gorey said he felt there was significant upside in global wheat markets in the short term until there was more certainty about Ukraine's ability to export.
He said a falling US dollar, combined with the unrest in the Black Sea, could fire markets along.
"The combination suggests prices above $US9.50/bu are likely," Mr Gorey said.
"Depending on the scramble to replace planned Ukraine cargoes, prices might even head into double digits for a period," he said.
"The initial reaction in any case is likely to be sharp - whether that persists beyond the very short term is another question."
The Australian aid community warned the disruptions could impact food security, particularly in North Africa and the Middle East.
Plan International Australia chief executive Susanne Legena urged Australian aid agencies to help, pitching a $150 million Famine Prevention Package to stop a catastrophe in the worst-affected hunger hotspots in the Horn of Africa, Afghanistan, Syria and Yemen.
"The collapse of this grain deal is a flashing siren that demands urgent attention," Ms Legena said.
"People are already dying from hunger. We will save more lives if we move now," she said.