Russians bomb Mykolaiv, Grain exports doubtful.


In the past week, wheat prices have come under considerable pressure as talks progressed on news of a proposed ‘humanitarian corridor’ through the Black Sea. This week, the market rebounded strongly after news emerged that Russia bombed the Ukrainian port of Mykolaiv on the Black Sea over the weekend. The trade are now dubious that the recent rhet-ric of ‘unhindered’ exports is in fact a smoke screen to delay further sanctions

The talks between Russia and Turkey (a Ukraine representative was not invited) were a non event.  Russian demands of reduced sanctions and de-mining the Black Sea were offset by Ukrainian concerns that this would simply allow Russian attacks by sea.  Turkey has offered to provide naval escorts, but the reality is that a de-mining exercise would take 2-3 months to complete and does nothing to allay Ukrainian concerns.

Recent rains of 15-30mm through Ukraine has helped crop prospects there, but a quick look at rainfall in the critical southern Russian wheat areas shows a deficit building.  Combined with higher temperatures, it is thought that stress is building in those crops leading into grain fill.  SovEcon are still estimating a Russian crop of 88mmt with exports over 42mmt.  The realisation of exports totalling in excess of 3mmt a month will depend on whether buyers can access Rubles and whether the trade can find shipping lines willing to take the risk.  The US has ‘warned’ about 14 North African nations that the “Russian” wheat they are buying may in fact be Ukrainian.  However, morals might take a back seat when people are hungry.

US winter wheat harvest has started at 6% complete.  The sample size is probably not big enough yet to draw any conclusions about deviations away from ‘average’ yields, but information to hand suggests that yields will be highly variable.

While the sum of all this ‘bad news’ around wheat and an impending food crisis, the fact is (on paper at least) there is enough wheat to go around.  Russia will again be the bench mark for global pricing, this time without the hinderance of export quota’s.  Assuming no ‘humanitarian corridor’, how does Ukraine export this season?  Slowly – and this should help to keep prices up.

The week ahead….

A USDA report due out over the weekend should provide some direction for the market.  The trade is expecting a bullish reduction in corn acres, but a relatively unchanged wheat and bean stock position.  Rain forecast through the Canadian Prairies will be a bearish influence if it materialises as expected.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Data sources: Reuters,  Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

Bears in the new crop

This week has been all about the impending Northern Hemisphere harvest hitting the pipelines. Despite a raft of supportive news, the noise was drowned out

Read More »
Grains & Oilseeds

Canola wild ride continues

In the World Agricultural Supply and Demand Estimates (WASDE) released last month global canola and rapeseed production was forecast to remain at the upper end

Read More »
Grains & Oilseeds

India a demand dark horse

This week has seen the wheat market jump on cuts to Russian production, only to give most of the gains back as rains appeared in

Read More »

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

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
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.

Photo of a farmer surrounded by Merino sheep in dusty yards
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. 

Image of harvested grain pouring into a chaser bin

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.