Grain markets continue to struggle with the effects of the war in Ukraine and the impact it is having on global grain flows.
International wheat futures rose 50 percent to record highs after news of Russia’s invasion of Ukraine as access to supplies from one of the world’s largest grain exporters was virtually cut off from global buyers.
The war in Ukraine shows no signs of abating, but the harvest in global grain markets has come in the following weeks.
U.S. benchmark wheat futures are down more than 20 percent over the past two weeks as investors assess developments. Despite widespread financial sanctions, Russian wheat continues to find its way into global markets. It’s also evident that the US is unlikely to benefit from the lack of supplies from Ukraine, where post-invasion export sales have remained tepid.
Sharp falls in US futures markets have done little to dampen global spot markets, which are holding near record levels for those buyers who need to buy.
Similarly, domestic cash markets have paid little attention to the recent sharp declines in US grain futures.
Exporters have lowered their bids for country stocks with the decline in US futures, although that means little for farmers who are already well sold against last year’s winter harvest.
Domestic buyers and short sellers are being forced to pay for nearby positions in southern Queensland’s forage markets as they grapple with limited farmer sales and skyrocketing road freight costs. The situation is similar with the delivered destinations in South East Australia, including Melbourne. Stockfeed wheat bids rose another $15 to $390 shipped to the Darling Downs.
Recent rain has put pressure on northern sorghum bids as the greater part of the crop is downgraded to sorghum 2 and 3.
Stockfeed wheat and ASW are priced at $400-$410 shipped to Melbourne to attract sellers with barley shipped at $390.
Extreme market volatility is likely to persist as buyers and sellers try to reconcile the expected loss of much of Ukraine’s annual combined 45-55 million tons of wheat, barley and corn exports, as well as 8-10 million tons of canola and sunflower oil exports.
Australian exporters are already reporting strong buying interest in new crop wheat, barley and canola.
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