Political in the Ukraine, which is one of the world’s major wheat producing countries, has brought more volatility to the international grain market,
Commenting on the situation at the weekend, David Sheppard, of international grain and fertiliser traders Gleadell, said the escalation of tensions between Russia and the Ukraine had caused grain markets to react, posting strong gains over the past week.
“It has been said that a week in politics is a long time,” he said.
“Well, this has truly translated into the grain markets.”
He predicted that if the situation in the Ukraine worsened, there could be issues regarding Ukrainian farmers’ ability to put the required level of inputs on their crop.
“This is conjecture, which is what is driving our markets for the moment,” he went on.
“In short, the return to markets after Easter could see another price spike if the Ukraine situation worsens or a pullback in prices if tensions ease.”
The critical points might be if there was evidence of a port blockage or sanctions were imposed.
Otherwise, he believed Black Sea grain would continue to be exported and as far as the international market was concerned it was valued as less than wheat from either Europe or the United States.
“The recent rally in global prices has resulted in US/French supplies becoming expensive against Black Sea/Romanian wheat, as witnessed in the latest Egyptian tender for the purchase of a quarter of a million tonnes which went to Russian/Ukrainian merchants at some $20 per tonne below the French price.
He reported that aside from the EU, being caught up in the Russian/Ukrainian political scene, Europe’s wheat export figures this year were already standing at 24.3 million tonnes compared with 16.3 million tonnes last year.