The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR [Mintec Code: WROF] was assessed at €267.00/mt, down €13.00/mt week-on-week (w-o-w). Wheat prices were in a limited range this week, mainly pressured by the supply from the Black Sea. However, market participants expect to see some volatility in the next coming weeks as the market awaits news on the Black Sea grain corridor deal extension (expires on 18th March 2023). If the deal is extended, pressure on wheat prices will likely continue. Furthermore, large Australian and Russian wheat crops will likely continue to weigh on prices. Some market players also think that wheat prices will continue to trade in a wide range until there is clarity on the size of the northern hemisphere wheat crop.
The overall market sentiment from market participants is that the grain corridor deal will be extended, and there is a feeling that the market has priced that in, hence no massive price gains have been observed this/last week. However, there is also scepticism. A grain broker told Mintec, “I think the war will intensify, and things will get uglier. Now we need to understand what role China will play here, will they support Russia and supply them with weapons? Grain supply could come under threat in case of no extension of the grain corridor deal and, as a result, we could see a reduction of 4-5 million mt of grain exports per month from Ukraine.”
A trader told Mintec, “two weeks ago, there was a bigger offload, but this week there is minimal movement on the market [Ukraine], especially at the ports. The demand is really weak, and also buyers are not rushing to buy, they are waiting to see what will happen to the grain corridor deal. I think trade activity will pick up after the extension of the agreement.” Another trader added, “there was minimal movement this week on small waters also because of unfavourable weather conditions, some terminals suspended their activity of loading grain onto barges.” Another issue is vessel backlogs at Ukrainian ports. A trader told Mintec, “currently, there is no advancement, everything just stands – there are about 140 vessels waiting for inspections. Russia intentionally slows down these inspections, and they look for ridiculous reasons, sometimes for some non-existent documents.” Thus, this is causing a slowdown in grain trade and deliveries. According to the latest news, Ukraine will suggest to its counterparties to extend the grain corridor agreement for one full year instead of 120 days, as well as increase the number of inspection groups in order to reduce the queues for vessel inspections. Mykolaiv port (which accounts for 35% of Ukrainian food exports) will also be requested to be included in the deal going forward.