Fire in Russia's Novorossiysk supports wheat, despite limited impact

A fire in the Russian city of Novorossiysk, a drone attack on Moscow and reports of a naval attack on Russian warships have been cited as the main reason for an uptick in global wheat prices, despite none of the incidents directly relating to the grain sector. 

A fire was reported on Friday morning at the city's cargo terminal, but it was well away from areas associated with grain shipments and is unlikely to have any impact.

Trade sources also said the fire had been put out after three hours and had occurred far away from the biggest port in the Russian Black Sea area.

It was thought to have started among wooden pallets before spreading over an area of 1,300 square meters, according to local media reports that quoted local the authorities.

Information circulated that the fire had also ignited oil stored close to the site, although it was put out by 12.21 Russian time.

Chicago soft wheat contracts were up almost 2% on the news of the fire and the attack on Moscow, while Euronext European milling wheat contracts had gained up to €3/mt as the news broke. 

Hot weather in the region will often lead to seasonal outbreaks of fires amid tinder dry conditions, but it is unusual for such fires to draw much attention. 

However, in recent days Russia has suffered a series of explosions, drone strikes and other incidents that have targeted the capital Moscow, the key strategic link of the Kerch Strait bridge and Russian vessels in previously safe ports such as Novorossiysk. 

Although Kyiv has declined to comment on most of the incidents, the consistency of the attacks mean the trade is starting to pay more attention to the emerging pattern, as concerns rise that the capacity to regularly hit targets in Russia could disrupt grain flow out of the country.

Novorossiysk is the primary export location for much of Russia's wheat, as well as being a significant location for maritime activity and Russian naval forces.