Unrest in the Black Sea region keeps grain market volatile
The grain market remains highly volatile. After the restless weekend with Russian attacks, wheat prices continued to fall unperturbed. Wednesday night’s drone attack caused a recovery, although it was stronger at the start of the trading day than in the afternoon.
Russia continues to thwart Ukrainian grain exports. On the night of August 16, Russian troops attacked the southern regions of Ukraine with drones. A grain warehouse was damaged in a grain terminal of a port on the Danube River in the Odessa region, ANP reports.
Global Wheat Balance
The global wheat balance has become looser, which is putting pressure on prices. Good harvest conditions in the United States for wheat have led the US Department of Agriculture (USDA) to estimate US wheat stocks for the 2023-24 season higher than previously assumed. Despite the fact that the global closing inventory for 2023-24 is slightly lower, international prices were under pressure at the beginning of this week. The supply of Russian wheat, although smaller than last season, is still substantial.
Ukrainian grain exports
In addition to the ongoing unrest in the Black Sea region, Ukrainian grain exports continue through various streams. Ukraine is one of the largest grain exporters in the world. Romania aims to double the throughput capacity for Ukrainian grain to 4 million tons, the Reuters news agency reports. The additional exports will mainly be via the river Danube.
Complex situation in Black Sea region
The situation in the Black Sea region remains very complex. Dozens of cargo ships are stuck in Ukrainian ports. In addition, the cost of a war risk premium for the Black Sea, which is on top of the annual insurance costs, increases significantly. Moscow only wants to return to the grain deal if it gets better conditions for exporting its own food and fertiliser. Turkish President Erdogan, co-negotiator of the grain deal between Russia and Ukraine, hopes to get Russian President Putin to the table at the end of this month for further negotiations on the grain deal.
