Novorossiysk Grain Terminal

Tension in the Black Sea remains the key driver in global ag markets at the moment. The ’will they, won’t they’ rhetoric reached a peak mid-week when the White House released ‘credible’ intelligence that Feb 16 was THE day that Russia would attack. Instead, it was the day that Russia announced a withdrawal of sorts. The relief was palpable, albeit short lived.

Over night, reports emerged of shelling in the Eastern border province of Donbas.  Russian controlled militia’s were blamed, but it was enough to shake up the wheat market again.

In short, expect the unexpected.  This market will remain on high alert until there is a clear progress made in diplomatic efforts to ensure peace.  The wheat market is trading the risk of war and with global wheat stocks already at historically low levels, this uncertainty is making for an extremely volatile trading environment.

Black Sea FOB prices have tumbled in the past couple weeks as end users have avoided the origin due to fears of blockades and execution risks out of the region.   Case in point, Egypt tendered for 180kmt wheat, which was awarded to Romanian origin, even though Ukrainian wheat was offered at a cheaper FOB number.

Outside of the Black Sea there are limited price drivers for wheat markets in the short term.  SovEcon raised Russian production to 84.8mmt (+3.6mmt) on ideal conditions.  It remains too early to trade weather risks despite some lingering concerns in a couple of key regions that conditions remain drier than ideal. 

Winter wheat crops remain dormant with stresses now unlikely to have a severe impact on yield potential at this stage.  The critical period will begin late March/April as crops emerge from dormancy and start the key growing season.  As moisture requirements increase,  any ongoing dryness issues will start to catch the market’s attention.

The week ahead….

It remains a very tricky market to navigate. Geopolitical issues aside, the fate of this seasons northern hemisphere crops is far from known.  It will not take much of a production threat to really shake things up.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources:

USDA, SovEcon, Dartboard Commodities

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

Why are diesel prices smoking?

Australian diesel prices for farmers have reached their highest levels on record recently, but what has been the cause, and will the situation improve anytime

Read More »
round hay bales
Grains & Oilseeds

Demand dry in the hay market

Feed demand and hence prices can be looked at as a solid indicator of pastoral conditions, producer intentions, and of course availability. QLD hay prices

Read More »
Australian wheat shipping terminal
Grains & Oilseeds

The sharks are circling

It was a bloodbath in the agricultural commodities last night, indeed the whole week. Since last Friday, Dec ’22 wheat has lost 139¢/bu or $62/t

Read More »
Percentiles with a background image of hay bales

Percentiles – June 2022

Mecardo’s Percentiles update for June 2022. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

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.