Escalating tensions in the Black Sea helped push world wheat markets higher early this week.
The latest crisis erupted on the weekend when Russian patrol boats fired upon and seized smaller Ukrainian naval vessels on the weekend, wounding three sailors in the process.
The conflict escalated after Russia cut off Ukraine’s access to the Kerch Strait and the Black Sea.
PRESSURE has been building for a long time between the rival Black Sea wheat exporters, who now account around a quarter of world wheat trade, over access to the Azov Sea.
Crimea, on the western shore, is now controlled by Moscow, the eastern shore is Russian territory, and the northern shore is controlled by Ukraine.
Ukraine is currently harvesting a record large corn crop and the blockade of the Kerch Strait by Russia is putting mounting pressure on their road and rail logistics. Ukraine exports around 10 per cent of its grain shipments through this narrow stretch of water.
More broadly, the conflict highlights how exposed global grain buyers have become to supply risks for Black Sea grain.
United States wheat futures rallied by two per cent on the news.
Understandably, local markets were unmoved by the latest Black Sea supply risk where traders are faced with the smallest east coast winter grain harvest in a decade. East coast exports from the current wheat harvest are likely to be cut to miniscule levels with end users forced to tranship supplies in from Western Australia for the foreseeable future.
The conflict highlights how exposed global buyers have become to supply risks for this region's grain.
Wheat harvest is almost finished in northern NSW and rapidly advancing in the south. Rain slowed harvest pace last week. GrainCorp said they received around 100,000 tonnes of grain deliveries into its NSW network in the past week.
The NSW winter harvest is already starting to wind-up and total GrainCorp harvest deliveries are now around 260,000 tonnes. Final grain deliveries for the season as expected to be a small fraction of the five-year average of more than four million tonnes.
Last week’s widespread rain in northern NSW will allow farmers to resume sorghum planting. Areas around Moree, Croppa Creek, Bellata, Narrabri, Gunnedah and Quirindi received a general 30mm to 50mm of rain. It was timely for sorghum farmers, who were waiting for more moisture to finalise plantings.
Patchy rain was also recorded across the Darling Downs in Queensland.
Sorghum markets fell on last week’s rain. Newcastle bids fell by $15 to $365 while the Darling Downs bids were $10 lower at $357.
Australian barley markets steadied last week following the news that China had launched an anti-dumping investigation on Australian imports.
Reasons for the anti-dumping investigation are unclear. Some are arguing anti-dumping investigation may be a tit-for-tat retaliation for similar inquiries launched by Australia on Chinese goods including steel and solar panels. Whatever the reason, China has flagged they are now adopting a harder line on Australian agricultural imports than they have previously.
Western Australian barley values fell by $30 to $40 a tonne on the news of the China anti-dumping investigation. Prices recovered late in the week as buyers returned, with Australian barley viewed as globally cheap.
