Wheat markets fall to £190/t on news of grain deal extension

Russia, Ukraine and the United Nations have agreed to an extension of the Black Sea grain export deal for two months.

Global wheat markets weakened in reaction to the news, with wheat futures in both Chicago and Paris dropping.

In the UK, wheat futures have fallen £10/t over two days to open at £190.25/t on 18 May for the November 2023 contract.

See also: Black Sea grain deal creates turmoil for wheat markets

The UK wheat market was already in a fairly bearish position, with a high carryover expected into the new crop year, and this news is adding further pressure to prices.

Paul Joules, commodities analyst at Rabobank, said: “Given that Russia has repeatedly expressed its unhappiness with the deal, the extension came as a surprise to the market, and as a result, wheat futures declined sharply following the announcement.

“Despite the renewal, the 60-day limit keeps risk in the grain market, particularly as the current expiration will occur just before Ukraine’s typical export window.

“It’s vital that we see another renewal at the end of this period, as there is greater reliance on Ukrainian exports globally at that point in the season.

“Ukrainian farmers are currently planting their spring crops, and the time limit also presents them with uncertainty that they will be able to export their next crop, potentially affecting their decision to plant,” said Mr Joules.

Andrey Sizov, head of market analysis firm SovEcon, said the direction of wheat prices for farmers all over the world was down.

“No inbound vessels have passed the inspection clearance since 6 May, so the deal has effectively been on pause already, not even taking account of the 18 May deadline,” he said.