Market Overview
Markets have been consumed by one factor over the past seven days. Russia’s invasion of Ukraine sent the markets into chaos when the invasion was on a far greater scale than many had anticipated. Global grain and oilseed prices have since soared ever since and their has been a sharp increase in global prices for many other agricultural commodities.
The war between the two nations has had huge implications for the market as both are major exporters of vital raw materials. Disruption to shipments and products coming out of both countries has given support to all materials.
Russia is the worlds largest exporter of wheat with Ukraine ranked 5th. Together the two countries export in the region of 60MMT (million metric tonnes) of wheat and produce 14% of the global supply. Ukraine is currently the 4th largest exporter of maize at 33.5MMT with Russia ranked 11th at 4.5MMT. Together they contribute to 4.72% of global supply.
Russia and Ukraine also account for over 58% of global sunflower production. Ukraine produces 17.5MMT with Russia producing 15.5MMT. Ukraine also accounts for 18% of global barley exports and 19% of rapeseed.
On Thursday 24th Feb, the day following the invasion, London May Wheat Futures saw the highest levels since 2008 and has been rising daily ever since. Many suppliers withdrew forward prices as the market reacted to the unprecedented events, with supply concerns being the main contributing factor. Offers on forward straights prices have started to begin again but on a limited basis and at elevated levels. There are some commodities that are still withdrawn.
Currently the majority of commercial vessels are unable to enter or leave the Black Sea. There are several reports that a number of ports and crushing plants have either closed or been damaged by the ongoing conflict. The lack of supply from the Black Sea will force many to turn their focus to other major exporters. Forecasts suggest that Russia are yet to export over 13MMT of wheat and 3MMT of maize. Ukraine is yet to export over 5MMT of wheat and 13MMT of maize. The new demand on other exporters in the market will offer support to global prices.
To summarise the long term effects the conflict will have are still very unclear. Much will depend on how long the conflict lasts and if shipment disruption is going to last. However for the short term, the conflict has offered support to UK prices and elevated prices on all commodities. If you have any enquiries regarding straights prices please do not hesitate to ask and we will do our very best to supply the most up to date information as we can.
