A corn in Ukraine, guarded by two brothers. Photo by AP
Grain prices rose again this week, especially wheat and corn close to their all-time high, in the midst of the war in Ukraine and with the prospect of a collapse in the world’s wheat reserves.
Prices are “at levels close to the highest recorded. The situation in Ukraine is not improving, and it is becoming more important as we approach the crucial times for spring planting,” warns Gautier le Molgat, a analyst at Agritel.
Before the war, Ukraine, a country known as “the breadbasket of Europe”, exported 12% wheat, 15% corn and 50% sunflower oil in the whole world.
But “the continuation of the conflict has delayed Ukraine’s ability to return to the market and the time when ports will be able to export again,” warned Edward de Saint-Denis, a broker at Plantureux and Associates.
The export capacity of Ukraine is reduced to 10% of its potential, and only by routes and trains. The neighboring Black Sea ports of Bulgaria and Romania are crowded.
Tribute to a Ukrainian soldier killed in the war. Photo by Reuters
problems in ukraine
“Obviously they planted wheat, but can they harvest and then export? That’s the question “the market is asking and prices are raising, says Jason Roose of U.S. Commodities.
Although the conditions for planting are difficult, according to Edward de Saint-Denis: “What we see in our customers on the site, is a big problem due to (lack of) fuel for agricultural machinery”.
“The market continues to accumulate risk premiums every day: inflation premiums, war premiums, climate premiums,” summarizes Jason Roose of U.S. Commodities.
“The agricultural sector is getting the attention of the whole world”He added.
cereal prices is also oil driven. The increase in crude requires an increase in oilseeds, which are used in the manufacture of diesel, such as rapeseed or soybeans, and in corn-based ethanol in the United States.
Exactly on U.S. soil, the state of wheat crops is moderate and corn planting is starting slowly, according to a report from the Department of Agriculture (USDA).
The cold and humid weather in the midwest of the country, dry in the great plains of the south, “not ideal for starting crops”which also supports prices, Roose said.
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