Following two days of frenzied activity in global grain markets, prices have slipped right back close to where they were at the start of this week.

The story almost reads like an auto-response scenario – war has broken out so prices must escalate and then someone asked what is really going on here.

One of the good things about the transparency in grain markets is that everyone can see what is happening.

Incursion

The day after the incursion of Russian troops into Ukraine, futures grain prices began to rise. December MATIF wheat came into this week at €262.75/t and that increased to around €280/t by Wednesday evening.

When the attack occurred on Thursday, all contract prices began to rocket on both sides of the Atlantic. That same December contract rose to a high of €319.75/t before falling back to close the day at €291.75/t.

At the time of writing on Friday evening 25 February (5.15pm), that contract had dropped back a further €23.75 to close the week at €268.25/t.

Nearby wheat

The story for the nearby March wheat contract was broadly similar, but even more dramatic.

It started the week around €280/t and rose to a high of €344/t at Thursday’s peak. It closed on Thursday at €316.50/t and dropped back to €291/t by Friday evening.

So it has been a turbulent week on grain markets, but it seems that supply and demand issues have trumped trade concerns as the main market driver, for the moment at least.

But any news that indicates a disruption to Black Sea trade or of countries forming political alliances could rapidly change this sentiment.

Chicago wheat and maize markets saw similar increases early in the week, with significant reductions on Thursday and Friday.