Grain markets strengthened over the past week, as Black Sea tensions intensified once again.

While market fundamentals have not changed, concern over trade flows in the event of conflict are generating fears over logistics and availability, rather than supply.

Supply issues may subsequently emerge, but they are not a driver for the moment.

Wheat is also being supported by maize prices, with Chicago December contracts increasing since the start of January and nearby contracts also trending upwards, but this journey is a bit more bumpy.

Focus on wheat

While exports from the Black Sea region continued up to early this week, wheat prices are fluctuating on a day-to-day basis.

Trade disruption remains a risk and that is affecting prices.

Global wheat supplies remain tight, but any prospects of price escalation remain constrained by a possible recovery in wheat stocks following next harvest. The most recent International Grains Council (IGC) report puts both global production and consumption at new record highs.

The report also has global wheat closing stocks to rise at the end of the 2022/23 marketing year, although the anticipated stock levels in the major exporting countries may still be lower than normal.

On the production side, US wheat continues to be hit by dry conditions and the recent AHDB report indicates that crops in Texas are already at ear emergence stage, with expectation of poorer yields.

While prospects look better for the big European producers, growing conditions will affect price sentiment.

Barley and maize

The IGC report suggests that global harvested barley area is likely to be similar to last year, so yield levels will be critical for global production.

Weather in South America continues to affect sentiment in maize markets.

Early yields in Argentina have been disappointing and the overall condition of its maize crop is said to have worsened.

Native prices

Fundamentals have not changed, but prices have risen alongside the growing tensions on Ukraine’s borders. But such increases are very subject to political developments, both positive and negative.

Nearby wheat is in the €305 to €310/t range, with the higher end more likely in recent days.

Barley is running at similar price levels. Nearby maize imports have also pushed up to €305/t ex-port.

November wheat is also higher, with price offers now at the top end of a €260 to €265/t range. And November barley is currently running at €255/t.