Growers can expect more volatility in the grain market in the short and longer term as weather and geopolitical factors combine.
In the short-term negotiations over the extension of the Black Sea grain corridor are a key factor in current market direction. The initiative between Russia and Ukraine to extend the corridor, which allows safe passage to Black Sea ports, runs out on May 18.
In recent days inspections have fallen to zero, with a backlog of 67 ships reported to be waiting to be inspected and loaded, said James Bolesworth, managing director of CRM AgriCommodities on Tuesday (April 9).
There has been an escalation in the conflict and we cannot expect any extension to be agreed until at least until very near to the deadline.
The agreement into force in July last year and since then 30 million tonnes have left Ukrainian Black sea ports, according to the UN which is monitoring movements.
Half of the volume shipped has been maize, 28 per cent wheat with sunflower oil and meal making up 11 per cent of shipments.
China has been the largest customer at 7my, followed by 5.4mt to Spain, 3mt to Turkey and 2mt to Italy. Exports to the UK in the scheme are at 222,000t.
Futures prices have fallen, with the November 2023 feed wheat price dipping below 200/tonne, with that drop driven by the selling of short positions by investment funds, said Mr Bolesworth.
Eyes will be on this weeks World Agricultural Supply and Demand Estimates from the US Department of Agriculture. A tightening of supply could strengthen prices, although there is an expectation of an increased global grain crop this year due to larger plantings.
Market analyst Rupert Somerscales of Agri-Analytics tweeted that conditions in the Northern Hemisphere are largely favourable, with US corn plantings ahead of last year.
At April 25, 88 per cent of the UK winter wheat crop was in a good to excellent condition, compared to 84 per cent last year, according to the latest assessment by AHDB and ADAS.
The winter barley crop had a 90 per cent good/excellent score, up from 84 per cent in 2022, but only 66 per cent of the oilseed rape crop was in good to excellent condition down from 70 per cent last year.
Spring planting has been delayed by a month with less opportunity to apply fertiliser which will impact on yields.
The market is expecting the largest exportable surplus of wheat since the 2016/17 season this season, with 2023/24 opening stocks above 2.4mt, according to AHDB estimates.
UK wheat is currently competitive when priced in euros which might benefit sales if there is pressure on global supply, said Mr Bolesworth.
