World Grain - March 2022 - 18

GRAINMARKET REVIEW
Monthly wheat prices
(in dollars per tonne)
WHEAT
Russia, Ukraine crisis mires market in uncertainty
by Chris Lyddon
The growing crisis between Russia and Ukraine has overshadowed
the wheat market since the start of 2022, with many
global buyers and sellers reacting to uncertainty with a waitand-see
attitude. The market is supported by tightness in old
crop supplies.
Marc Zribi, head of unit for grains and sugar at the French
agrifood industry body FranceAgriMer, told journalists at a
Feb. 16 press briefing on the markets that the price of fuel
has jumped to historic highs, while freight costs had swung
higher. He also noted volatility in the currency of both Russia,
despite its high gold reserves, and Ukraine.
The French expert also noted that the price of farm inputs,
notably fertilizer, has risen sharply, with a correlation with the
price of natural gas.
European Union
Agriculture Commissioner Janusz
Wojciechowski told a meeting of the block's farm ministers
on Feb. 21 that " we see this issue affecting the markets and
farmers' incomes, driven by a more general energy price increase. "
He
put the rise in fertilizer prices at 142% over the past year.
" With higher input costs, farmers' rational decisions are
likely to result in less fertilizers used, potentially resulting in
lower yields, " he said.
Zribi also focused on the extreme uncertainty of the situation
between Russia and Ukraine, pointing out that exporters
were moving everything they could out of the region,
with both countries accelerating the export program. The two
countries are responsible for 30% of the world's exports of
wheat and barley, he reminded meeting participants. The ports
used for grain exports by Ukraine, in particular, were at risk
from conflict.
FranceAgriMer's British counterpart, the Agriculture and
Horticulture Development Board, reported on Jan. 21 that
wheat prices had fluctuated during the previous week because
of the Black Sea situation, but ended higher.
" Exports from the region are continuing but disruption remains
a risk, " it said. AHDB described Russia and French
winter wheat crops as looking good, but also explained that
parts of the United States remain dry.
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Wheat (US), No. 1, hard red winter, ordinary protein,
export price delivered at the US Gulf port for prompt or
30 days shipment
" In Texas, crops are reaching ear emergence and so are
more sensitive to adverse weather, " the board said.
In its Grain Market Report of Feb. 17, the International
Grains Council (IGC) reported that its index of wheat prices,
which bottomed out at a three-month low in mid-January,
firmed to 2% up on its level of a month earlier.
" However, movements were two-sided, with heavy influence
from external markets adding to elevated volatility at
times, " the IGC noted. " Net changes in major exporters' prices
were also mixed, as declines in the EU and the Black Sea
region contrasted with increases at most other origins, notably
in Canada.
" Markets posted solid gains in the latter half of January,
when building worries about potentially escalating Black Sea
tensions fueled fears about market availabilities, while robust
buying interest, notably from importers in Asia, provided
background support. Prices continued to respond to geopolitical
developments in the period since, with occasional pressure
from profit taking, albeit with rallying row crop prices offering
support in recent weeks, along with talk about unfavorably
dry weather for 2022-23 winter crops in some Northern
Hemisphere producers. "
In its Food Price Index, which was published on Feb. 3, the
United Nations Food and Agriculture Organization reported
a 3.1% fall in world wheat prices in January, " with increased
seasonal supplies from large harvests in Australia and Argentina. "
" However,
support from continued strong demand amidst
tight global availability of higher-quality wheat along with
uncertainty over exportable supplies, prevented prices from
declining further, " the FAO said.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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March 2022 / World Grain / World-Grain.com
Source: USDA; World Bank
http://www.World-Grain.com
World Grain - March 2022

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