Black Sea deal weighs on wheat prices

Although the negotiators are still talking, news that the Black Sea Grain initiative is to be extended – for at least 60 rather than 120 days – has weighed on wheat prices this week.

“We are waiting yet again for a 60 day extension of the corridor without too many issues,” Stuart Attridge, trader at Harlow Agricultural Merchants told Agritrade News. “It’ll just keep churning on,” he added. “They need to clear these old crop silos with 30 million tonnes, or however many there are sitting in Black Sea ports. That volume is going to keep moving and pressure prices.”

The Black Sea Grain deal was first put in place in July 2022 to allow exports by sea from Ukraine and Russia via the Black Sea. The current agreement, the latest in a series of 120 day extensions, expires on Saturday March 18th. Russia said on Monday that it would accept a 60 day extension, with its deputy foreign minister Sergei Vershinin quoted by Reuters as saying after a meeting with the UN in Geneva that “our further stance will be determined upon tangible progress on normalization of our agricultural exports, not in words, but in deeds.”

The United Nations (UN) said that its secretary-general António Guterres has “confirmed that the UN will do everything possible to preserve the integrity of the Black Sea Grain Initiative and ensure its continuity,” in a note to journalists. It reiterated its support for the Black Sea deal as “part of the global response to the most severe cost-of-living crisis in a generation.”

Mr Guterres added that the UN “remains fully committed to the Black Sea Grain Initiative, as well as to efforts to facilitate the export of Russian food and fertiliser.” According to the international organisation, the Black Sea deal has made possible the export of 24 million tonnes of grain, with 55% of the food exported going to developing countries.

Mr Attridge also commented that “the UK on its own has got enough wheat tonnage to find a home for. We’ve got to ship a bit more out to Ireland, to Spain, to the Benelux countries to get rid of the balance,” he pointed out. “We just have to keep drifting lower to be competitive. Currency is strong today after the budget,” he added. “There is not much positive news out there I’m afraid.”

Millie Askew, lead market analyst at the AHDB, cited latest HMRC trade data in a report on Wednesday showing that “so far this season (Jul-Jan), the UK has exported 735,800 tonnes of wheat, which is over 2.5 times the volume shipped by this point in the 2021/22 season.”

She noted that “in the January UK cereal supply and demand estimates, 2022/23 full season wheat exports were estimated at 1.150 million tonnes.” Taking into account what has been exported up to the end of January, that leaves around 414,000 tonnes of wheat to be exported from February to June to meet the forecast,” she said. Ms Askew also highlighted new European Commission data, which showed that the EU imported 1.047 million tonnes of common wheat up to March 13th.

Although the negotiators are still talking, news that the Black Sea Grain initiative is to be extended – for at least 60 rather than 120 days – has weighed on wheat prices this week. “We are waiting yet again for a 60 day extension of the corridor without too many…