The Graincorp Ltd (ASX: GNC) share price is taking off on Monday amid a spike in wheat prices.
Chicago wheat futures have lifted more than 5% today after Russia exited the Black Sea grain deal over the weekend.
And the Graincorp share price is along for the ride. The ASX agriculture company's bottom line is closely tied to grain prices, meaning an increase in the price of wheat could boost profits.
The stock is up 7.99% right now, trading at $8.38. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has lifted 1.07%.
Let's take a closer look at what might be bolstering the Graincorp share price on Monday.
Russia suspends Black Sea grain deal
The Graincorp share price is gaining as news Russia has backed out of a United Nations-brokered trade deal appears to drive wheat prices higher.
The agreement was designed to allow Ukraine to export grain from the Black Sea without risking attacks on merchant ships, the Guardian reports. Russia could also export food and fertiliser under the deal.
However, Russia ditched the agreement following a drone attack on Sevastopol, its Black Sea naval base. The nation attributed the action to Ukraine.
The Russian defence ministry said, via Russian news outlet Tass, the attack targeted the nation's Black Sea Fleet and other ships involved with the grain corridor. It also said a drone might have been launched from a vessel carrying Ukrainian agricultural production.
Ukrainian president Volodymyr Zelenskyy called on the UN and G20 to respond to Russia's exit from the deal and the establishment of what he called a "blockade" in the grain corridor, saying:
This is an absolutely transparent intention of Russia to return the threat of large-scale famine to Africa and Asia.
Graincorp share price soars alongside wheat prices
If the Graincorp share price's current gains hold out until close, the stock will post its second-largest single-session gain of the last 12 months.
Today's lift hasn't proven enough to pull the agriculture share back into the longer-term green, however. It has dumped nearly 20% over the last six months.
That's despite the company upgrading its guidance in August.
Graincorp expects to declare between $680 million and $730 million of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) for the financial year 2022. It will release its full year earnings on 16 November.
