With Ukraine now producing over 62 million tonnes (Mt) of grain and Russia able to push close to 90Mt, it is hardly surprising that recent events in these countries are impacting on global grain markets.

So when forward price offers of over €200/t for November dry wheat and €190/t for November barley appeared last week, a comment on the market seems appropriate.

There are two things we know. One is that the future is very uncertain. The second is that these are relatively good prices, given the current level of grain stocks around the world today and the stated planting intentions for the year ahead.

While production is never certain, even after acreage is known, an average yield on the predicted planted acres would more than likely increase downward pressure on grain prices for the year ahead. This is why I have been urging caution re production costs and land rental.

But have the goalposts moved? Even this simple question is not straightforward. The end of season stocks will still be in place.

There is little to suggest that the projected planted area will not be met – indeed, it could be increased if the market price signal continues to encourage production.

So should we look forward to anything better than last year for the harvest ahead? Up to three weeks ago, I would say the answer was no. Now, anything can happen.

It is reasonable to suggest that the bulk of the world will continue with plan A as of a month ago. That’s a lot of grain. But what will happen in Ukraine and Russia?

Ukraine and Russia

One of the big questions being posed at the moment is “will there be credit facilities available to growers in Ukraine for the coming season?”

With Russian wealth likely to be important in the Ukraine banking system, what might happen if foreign Russian assets are frozen by international sanctions?

So, credit to grow the crop is a concern in Ukraine. Most likely, there will be no such concern in Russia.

But if there are a range of international trade sanctions in place who will, or who can, buy from Russia? Suddenly, these issues have become very real concerns.

Together both countries are estimated to export 50Mt in this marketing year. If some of this is not available the market will be different.

The 50Mt comprises of 25Mt of wheat, 18Mt of maize (from Ukraine) and another 5Mt of barley.

It is against this background that the market is concerned about events in the Crimea.

But we must still remember that, with the possible exception of Ukraine, the anticipated global production is still likely to happen, depending on weather.

So, if Ukraine had only 20Mt to export and if there were no export sanctions on food from Russia, the world could once again be awash with grain following the 2014 harvest. And who knows what that would do to prices.

The bottom line is that €200/t for wheat is a reasonable price and is worth considering for forward selling. Yes, prices could rise further and, yes, they could drop again too.

Time to consider

Against this background, it makes sense for growers to consider selling a little forward now to lock in some of these prices. One can sell more in a week or so if prices continue upwards.

If and when prices weaken again, you will have a portion of your harvest locked in at reasonable price levels.

Barley is slightly different in that its price will be highly influenced by the cost of imported maize.

And with end of season maize stocks likely to be considerably higher than last season, maize may again be forced to buy market share through price and keep pressure on all feed grains.

With maize still available for November 2014 at €198/t to €200/t ex-port, this limits where barley price can go. But all this could change depending on developments in the Crimea.

Another big global maize crop would further pressure all other feed grains unless other market factors prevail.

You need to be on the ball if you are serious about selling forward.

€200+ for wheat and €190+ for barely could be real selling opportunities but the market could still weaken as well as strengthen.