Since the end of the Black Sea Grain Initiative, the wheat market has been on the receiving end of some additional volatility. We have seen the Ukrainian port of Odessa under almost continuous air strikes as the Russian army attempts to knock Ukrainian exports out of the equation.
Early in the week, Russia upped the ante. Since the start of the war, Ukraine and the UN have invested in alternative pathways to enable grain to continue flowing. One major route was the Danube River (see image), which is on the border between Ukraine and Romania. It can allow Handymax-sized vessels (~17kmt) to travel into central Europe where loads can then be dispersed. It is understood that Ukraine was exporting between 2-3mmt per month in this manner.
Russia turned their attention from the ports in and around Odessa and zeroed in on the ports at the mouth of the Danube (Remi & Izmail). This is a fairly serious escalation due to the proximity of a neutral country, Romania, which also happens to be a member of NATO. The closest strike was apparently a mere 200m from the border.
Having bolted out of the blocks, the wheat market has since retraced much of the rally that we saw at the start of the week. While the risk remains heightened, the wheat market seems content (for now) that a solution can be found. There is speculation that the strikes on the Danube terminals were a ‘shot across the bow’ from the Kremlin to the UN Council in an attempt to get negotiations back on track. At least one source I’ve read seems to think that a “Grain Initiative 2.0” is on the table with concessions being considered to Russian demands.
Whatever Russia’s end goal is here, it appears that they want a monopoly on Black Sea grain exports. By weakening Ukraine’s export power, it weakens its economy and potentially its ability to fight the war. It highlights the importance of the Black Sea and the reliance that many in the Middle East and North Africa have on its export capacity.
Next week
The wheat market will be watching for any escalation in conflict or anything that resembles a diminishing of Russian export transit. Global food security has become a big stick to wield and we can be sure that many people will be working behind the scenes to ensure that things don’t get worse.
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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.
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.
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.
Black Sea at boiling point
Early in the week, Russia upped the ante. Since the start of the war, Ukraine and the UN have invested in alternative pathways to enable grain to continue flowing. One major route was the Danube River (see image), which is on the border between Ukraine and Romania. It can allow Handymax-sized vessels (~17kmt) to travel into central Europe where loads can then be dispersed. It is understood that Ukraine was exporting between 2-3mmt per month in this manner.
Russia turned their attention from the ports in and around Odessa and zeroed in on the ports at the mouth of the Danube (Remi & Izmail). This is a fairly serious escalation due to the proximity of a neutral country, Romania, which also happens to be a member of NATO. The closest strike was apparently a mere 200m from the border.
Having bolted out of the blocks, the wheat market has since retraced much of the rally that we saw at the start of the week. While the risk remains heightened, the wheat market seems content (for now) that a solution can be found. There is speculation that the strikes on the Danube terminals were a ‘shot across the bow’ from the Kremlin to the UN Council in an attempt to get negotiations back on track. At least one source I’ve read seems to think that a “Grain Initiative 2.0” is on the table with concessions being considered to Russian demands.
Whatever Russia’s end goal is here, it appears that they want a monopoly on Black Sea grain exports. By weakening Ukraine’s export power, it weakens its economy and potentially its ability to fight the war. It highlights the importance of the Black Sea and the reliance that many in the Middle East and North Africa have on its export capacity.
Next week
The wheat market will be watching for any escalation in conflict or anything that resembles a diminishing of Russian export transit. Global food security has become a big stick to wield and we can be sure that many people will be working behind the scenes to ensure that things don’t get worse.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Reuters, Green Square AC, Google, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
Time to cut the BOM some slack
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
Moving in the right direction
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
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.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
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.