KYIV, UKRAINE — As millions of liters of water poured through a breached dam in southern Ukraine threatening regional villages and water supplies, worries about an escalation of the war between major grain exporters Russia and Ukraine sent Chicago wheat up 2% to a three-week high on Tuesday, Reuters reported.

The Russian-controlled Nova Kakhovka dam on the Dnipro River provides water to a swathe of southern Ukraine’s agricultural land, including the Russian-occupied Crimean peninsula, as well as cooling the Russian-held Zaporizhzhia nuclear plant. 

The vast reservoir behind it is one of the main geographic features of southern Ukraine, 240 kilometers (150 miles) long and up to 23 kilometers (14 miles) wide. Russia and Ukraine accused each other of blowing up the dam. Neither side has offered public evidence of who was to blame. 

The dam’s collapse has added to supply worries in wheat as dry weather grips part of Europe and Russia that had fueled gains in US and European futures on June 5.

“This morning, prices are sharply up again in response to the escalating situation in Ukraine, particularly the blowing up of the Kakhovka dam,” brokerage Copenhagen Merchants said in a note, according to Reuters.

The most-active wheat contract Wv1 on the Chicago Board of Trade (CBOT) was up 2.8% at $6.41¼ a bushel at 0831 GMT, after touching its highest since May 17. CBOT corn Cv1 was up 1% at $6.03½ a bushel, while soybeans Sv1 gained 0.3% to $13.54½ a bushel.

The US Department of Agriculture (USDA) rated 64% of the US corn crop in good-to-excellent condition in its weekly crop progress report on June 5, down 5 percentage points from a week ago and below the lowest in a range of estimates in a Reuters poll.

After the market closed June 5, the USDA rated 62% of the soybean crop as good-to-excellent in its first 2023 condition ratings for the oilseed, below most trade expectations.

“Dryness in the US is lifting corn and soybean prices, even though it is a bit early as the crop has just been planted,” a Singapore-based trader told Reuters.

Forecasts projecting showers around mid-June in the Midwest and tepid export demand for US supplies were keeping corn and soy futures in check, according to traders who spoke with Reuters.