Wheat prices move lower, yet market players suggest prices are supported

The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR was assessed at €334.00/mt, down 5% week-on-week (w-o-w). Despite wheat prices moving lower on the week, market players suggested that this was a temporary fall as wheat prices continue to be supported by concerns about the grain corridor deal’s continuity due to fighting that has escalated in the Black Sea region. The extension of the export corridor would significantly impact the available wheat supply globally.

Russian and United Nations representatives met on 17^th October in Moscow to discuss the grain corridor deal’s extension. The deal is still on, but there is no clear indication of whether it will be extended. Russia claims that the agreement is not facilitating its ability to export and has demanded Western sanctions be eased on payments, insurance and logistics. A Mintec source noted, “It’s hard to know which side it [the grain corridor deal] will come down to. In terms of predictions, I think it will continue. The markets are indeed pricing more risks, but prices haven’t increased as much as you would expect in case of the deal’s discontinuation. On Russia’s side, it also depends on the reserves level they have in their central banks supporting the rouble; if they don’t have shipments from the Black Sea, that will put more pressure on the rouble, and President Putin is not going to want that. He also needs to fund the war”. Another Mintec source added some thoughts, “If the grain corridor deal is stopped, there will be a global backlash, there will be international outrage, the accusation will be that President Putin is withholding food from the poorest around the world who desperately need it”.

According to the Ukrainian Grain Association, Ukrainian grain and oilseed exports reached 8.09 million metric tonnes (as of 21^st October), with 363 vessels leaving Ukrainian ports, of which 34% were wheat shipments and 50% were corn shipments. According to sources, Ukrainian grain exports are close to their pre-war levels, just 2.4% lower than in the same 2021 period, despite the closure of several Ukrainian ports. According to a Mintec source, “the queue for outbound inspections is getting longer, but at least they are still able to ship”.