Global grain values rise due to market uncertainty

Global grain markets have risen following comments by Russian president Vladimir Putin about revising the Black Sea grain export corridor agreement.

Mr Putin raised concerns on 7 September on the future of the deal, claiming that only two of the 87 ships that had left the Black Sea region had reached developing countries. However, UN figures suggest about 30% of shipments had gone to low- and middle-income countries.

The deal was agreed to be in place initially for 120 days, with a review due in mid-November.

See also: Black Sea grain export deal signed – markets expected to fall further

Cefetra grain origination manager Simon Wilcox said: “Everyone is on tenterhooks about where we go from here. Clearly, we have to think he [Mr Putin] is going to want to see something happen.”

Zoe Andrew, grain trader at Frontier, said the market was watching the ongoing political uncertainty and the amount of grain that managed to get out of Ukraine, as well as the harvest in the US and Europe.

USDA report

A US Department of Agriculture report released on Monday 12 September suggested global supplies of wheat were growing by 3.6m tonnes to 1.05bn tonnes, due to increased production in Russia and Ukraine.

Lower global supplies of maize were forecast, which could encourage more demand for feed wheat.

Ms Andrew said: “Corn yields were reduced by about three bushels/acre in the US, which cut US corn production by 10.5m tonnes.”

Domestic market

UK grain prices have been following wider global trends, with November 2022 feed wheat futures opening at £279.9/t on 14 September, up by £9.90/t on week-earlier levels.

Sterling is fairly weak against both the euro and dollar, making UK grain exports slightly more competitive.

However, a weaker sterling is likely to have other implications – for example, the increased cost of imports, especially in relation to fertiliser.

Mr Wilcox said: “Exchange rates have helped us be a little bit more competitive to Europe. We are getting a little bit closer to being able to export wheat, but we are not quite there.”

Sell or hold

The AHDB has forecast a fairly neutral market for wheat, barley and maize during the next two weeks. Over the next two to six months, it is likely to be marginally bullish for all three.

Farmers Weekly asked traders whether growers should be selling or holding.

Ms Andrew said the market at the moment had so many factors, it was harder to read than it had ever been.

“Individual businesses need to assess their risk management and make decisions based on that, and what’s most appropriate for their business. We are seeing some uplift in the market, and I think a lot of focus has come back on to crop 2023 marketing again,” she said.

November 2023 UK feed wheat futures opened at £264/t on 13 September, up £2/t on week-earlier levels.

Mr Wilcox said: “I think it depends on how much they have sold; people have to look at these opportunities where the market bounces a bit and do a bit. They have to take advantage of these. Yes, there is an opportunity for it to bounce back, but just sitting and waiting is not a good strategy.”

“You have to look and see whether there is a margin at these levels, particularly for crop 2023. Prices could calm and be well off these levels, and then farmers will be in trouble because they will have high input costs.

“My view is to do a little bit and keep looking for opportunities to do something to get in a position where you have a spread of values, and you have at least locked in some decent margins in. Not huge amounts – just cover your costs. And each time you buy a bit of seed or fertiliser, hedge a bit by selling some grain.”