It had slipped off the radar recently, but this week the war in Ukraine burst back into the spotlight.
The week started with the poorly disguised collapse of the Black Sea grain corridor. Moscow’s often repeated concern that their demands were not being met, finally resulted in Russian co-operation with the initiative breaking down.
Had it been left at this, the market hoped that Ukraine, on the eve of their winter crop harvest, would still be able to move grain. However, in a rather alarming uptick in aggression Russia stated that any maritime vessels moving into Ukrainian ports would be considered legitimate military targets. But it was the next move by the Russians that caught the market offside. Ukraines ports, including the key ports of Odessa and the nearby city of Chornomorsk, have been hit by a barrage of missiles and bombs targeting loading and storage facilities.
The wheat market leapt 8% or nearly 60¢/bu on renewed concerns that the flow of Ukrainian grain would be slowed to a trickle and that most of its 16mmt of wheat and 30mmt of corn would be land locked. It has renewed concerns that some of the worlds most food insecure countries would again be at the mercy of food shortages.
The assumption is that ample Russian supplies will fill that void, however the new aggressive stance (on both sides) that civilian vessels are now considered legitimate targets throws up some doubt about navigation in and out of the Black Sea.
Weather risk is also raising its head again. Temperatures are on the rise across North America with little to no rain in the seven day forecast. The gravest concern remains in southern Canada where models are showing deteriorating yield potential. The key US Midwest has seen an improvement in drought areas in the past couple of weeks. However, if the dry conditions persist beyond the end of July and into August, this could start to impact the soybean crops in particular.
Next week
We suspect that the Black Sea driven rally will settle in time – assuming there are no more flash points. It does seem that the market has become addicted to the volatility and that it is here to stay for a while longer yet.
It’s May and the new season World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture (USDA) is out. The WASDE
After the relatively quiet last few months where the ag commodity markets have drift-ed lower, the establishment of the weather market has seen a welcome
Grain and oilseed markets are showing some good old-fashioned spring (in the northern hemisphere) volatility. We know that springtime dryness can grow into real production
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Wheat in the searchlights
The week started with the poorly disguised collapse of the Black Sea grain corridor. Moscow’s often repeated concern that their demands were not being met, finally resulted in Russian co-operation with the initiative breaking down.
Had it been left at this, the market hoped that Ukraine, on the eve of their winter crop harvest, would still be able to move grain. However, in a rather alarming uptick in aggression Russia stated that any maritime vessels moving into Ukrainian ports would be considered legitimate military targets. But it was the next move by the Russians that caught the market offside. Ukraines ports, including the key ports of Odessa and the nearby city of Chornomorsk, have been hit by a barrage of missiles and bombs targeting loading and storage facilities.
The wheat market leapt 8% or nearly 60¢/bu on renewed concerns that the flow of Ukrainian grain would be slowed to a trickle and that most of its 16mmt of wheat and 30mmt of corn would be land locked. It has renewed concerns that some of the worlds most food insecure countries would again be at the mercy of food shortages.
The assumption is that ample Russian supplies will fill that void, however the new aggressive stance (on both sides) that civilian vessels are now considered legitimate targets throws up some doubt about navigation in and out of the Black Sea.
Weather risk is also raising its head again. Temperatures are on the rise across North America with little to no rain in the seven day forecast. The gravest concern remains in southern Canada where models are showing deteriorating yield potential. The key US Midwest has seen an improvement in drought areas in the past couple of weeks. However, if the dry conditions persist beyond the end of July and into August, this could start to impact the soybean crops in particular.
Next week
We suspect that the Black Sea driven rally will settle in time – assuming there are no more flash points. It does seem that the market has become addicted to the volatility and that it is here to stay for a while longer yet.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Reuters, USDA, Assoc Press, Next Level Grain, Mecardo
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Jack tours Russia
To start the week, the wheat market got a very nice little push courtesy of Russian frosts, a bullish USDA report and technical short covering.
Benign May WASDE
It’s May and the new season World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture (USDA) is out. The WASDE
Weather bingo card
After the relatively quiet last few months where the ag commodity markets have drift-ed lower, the establishment of the weather market has seen a welcome
Getting good prices while avoiding volatility
Grain and oilseed markets are showing some good old-fashioned spring (in the northern hemisphere) volatility. We know that springtime dryness can grow into real production
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.