The Mintec Category Index (MCI) for global cereals fell to USD 297/MT, down 1.2% month-on-month (m-o-m) on the 19th of August 2022. Global grain markets were under pressure on the back of the grain corridor deal (signed between Ukraine, Russia, Turkey and the United Nations on the 22nd of July 2022) and improved global wheat harvest estimates.
As of the 30th of August 2022, 62 vessels (grains and oilseeds) have departed Ukrainian ports (Odesa, Chornomorsk and Yuzhny). According to market participants, grain and oilseeds exports via sea from Ukraine totalled 1,446,800 metric tonnes so far this month, significantly below the estimate of 3-5 million metric tonnes. Market players have told Mintec that demand is returning, which may cause prices to move upward in September. Buyers are showing significant interest in Ukrainian grain, seeking shipments of wheat and corn for fast delivery to the ports, and traders continue to charter new vessels.
A trader commented to Mintec, “About 70-80 vessels will be actively working in the deep-water ports of Ukraine in the foreseeable future. Depending on what the prices are for Ukrainian grain, the market could move up as many are going to lack cover over September and will be ‘forced’ to buy”. In addition, so far, only eight vessels have arrived/moored in Ukraine. This is due to shipping insurers being reluctant to underwrite vessels in the war zone. Industry sources told Mintec that the new vessel arrivals might be slow, which could potentially stall grain exports in the following weeks and result in these commodity prices moving upwards in September.
Moreover, continued hot and dry weather across the EU and US is causing concerns over the conditions of the corn crop, with the USDA lowering crop conditions on a weekly basis. Currently, global corn ending stocks for the 2022/23 season is forecast at 306.6m tonnes, the second-lowest ending stock level in eight years. This means that the corn supply and demand balance sheet is very tight. Thus, if hot weather continues in the EU and US, production is likely to be reduced further, leading to an upward pressure in corn prices.
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