Why the Russian Invasion of Ukraine Moved Wheat Futures Prices More in the U.S. than in Europe

Russia’s invasion of Ukraine in early 2022 sparked heightened uncertainty over the economic outlook in both countries and prompted an increase in financial market volatility. One of the most impacted areas was the derivatives1 markets for wheat. As one might expect, wheat markets in the European Union (EU) showed significant effects. However, somewhat counterintuitively, the U.S. market had an even stronger price response. I attribute this to differences in market structure and greater access to U.S. markets, which allowed speculators to amplify some of the price movements.