UK wheat futures set new high: Grain market daily

• UK feed wheat futures (May-22) gained £21.05/t on Monday from Friday’s close, settling at £252.05/t. New crop futures (Nov-22) climbed £12.50/t from Friday, to close at £220.50/t yesterday.
• Chicago maize futures (May-22) jumped $13.78/t yesterday, to close at $271.95/t.
• Paris rapeseed futures (May-22) gained €50/t to close at €755.50/t yesterday.
• Brent crude oil (nearby) closed at $100.99/ barrel, up 3.1% from Friday’s close.

Yesterday global grain and oilseed prices jumped up, in response to the ongoing conflict in Ukraine. UK feed wheat (May-22) closed yesterday at a new high of £252.05/t. Today UK feed wheat futures (May-22) are trading at £260.00/t (13:00GMT). There are increasing concerns that tensions may last longer than first expected.

Ports closed in Ukraine

Major international companies including ADM and Bunge have suspended operations in Ukraine on Russian invasion, according to UkrAgroConsult. Grain loading stopped from the morning of 25 February as approaching ports became too dangerous. All ports in Ukraine are understood to remain closed until the end of the Russian invasion.

To meet current forecasts, Ukraine has sizeable volumes of  wheat (5.5Mt), maize (13.7Mt) and sunflower oil (4.0Mt) to export before the end of the season. With ports currently closed in Ukraine, how much of this remaining volume will be shipped? What we do know is there are concerns building around the impact of this on global supply.

Russian exports continue but face severe disruption, with international sanctions limiting credit availability, and disruption to shipping routes. News came this weekend that some Russian banks faced being banned from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), making international payments more difficult.

Next season’s supply (2022/23) is also called into question, depending on how long the conflict continues. Spring planting of wheat in Russia and maize planting in Ukraine are due to begin in April. Something to watch going forward.

Wheat tenders update

Egypt’s state buyer, General Authority for Supply Commodities (GASC), cancelled a second global wheat tender in the past week. This is down to a low number of offers, as Ukrainian tensions disrupt the market.

News was announced this morning that the major global wheat importer are increasing their moisture level requirement for one year, to April 2023. This is from 13.0% to 13.5% and looks to reduce reliance on specific origins.

What does this mean for UK prices?

Tightening global supplies paints a bullish outlook for short term prices for global grains and oilseeds. The closure of ports in Ukraine, and global sanctions on Russia, calls into question how much can be shipped from the Black Sea area and when.

We saw a large reaction yesterday, in grain and oilseeds markets alike. Volatility will continue as the market is sensitive to new news, including price volatility on UK wheat futures and delivered prices.

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