Fuel feels the burn on further sanction tensions: Grain market daily

Market commentary

• UK feed wheat futures (May-22) rose for the sixth consecutive session yesterday, up £18.00/t to close at a record £303.00/t. However, only 150 contracts were traded during the day, the lowest traded daily volume since 17 February 2022 (Refinitiv). New crop (Nov-22) also rose (£11.00/t) from Friday’s close, to £249.00/t, a contract high.
• Markets are said to have paused while traders wait to see the outcome of several international tenders this week. These will allow greater insight into the price and availability of wheat.
• Both Chicago maize (May-22) and soyabeans (May-22) eased back yesterday, $1.38/t and $0.37, closing at $295.57/t and $609.70/t respectively. Despite the Black Sea supply turmoil, improving conditions in Argentina have removed a bit of the heat.

Brent crude oil prices have continued to surge. The USA announced on Sunday (6 March) that active discussions were underway with European allies to fast-track negotiations banning Russian oil imports. While Russian oil shipments only accounted for 7% of US oil imports in late 2021, the EU is much more dependent on supply. Approximately 30% of European oil and 39% of gas is sourced from Russia.

Even though Germany and the Netherlands rejected the plan yesterday, it remains on the table for the US.

In response, Russia has threatened to close off Nord Stream 1, the main gas supply line from Russia to Germany.

This increased uncertainty to global supply, when the outlook was already tight before the conflict began, is adding additional support to surging oil prices. And this is being felt here in the UK at the pumps.

UK pump prices are at record highs, and these rising costs are coming forward as spring fieldwork campaigns begin for many growers. So, while UK new crop prices are at record levels, input costs are rising in concert.

Equally, with gas prices soaring and availability restrictions being threatened, there is no let up on the horizon for fertiliser prices. Even for those UK growers who are covered for this season, it would be mindful to think ahead to 2022/23 and the potential cost of replacing supplies should the Ukrainian conflict draw out.

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