The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR [Mintec Code: WROF] was assessed at €244/mt, up €2.00/mt week-on-week (w-o-w) on the 20th of April. The wheat market was rather volatile this week due to fears about the grain corridor closure. Yet, according to market players, the trade was very slow, and there was minimal price change. The uncertainty around the grain corridor deal and the ban on Ukrainian agricultural products by neighbouring countries did not result in new buying interest for wheat. Market players believe that ample production from Russia and good supply from the EU will cap any significant price increases in the near term.
At the beginning of the week, there was market information that, once again, there were no inspections of bulk carriers under the grain corridor deal for two days (the 17th and 18th of April). Similar to last week, when there was no vessel inspection on the 11th of April, but then shipping resumed on the 12th of April. Market participants noted that the lack of vessel inspection is a violation of the grain corridor rules because the names of the vessels were given by the Ukrainian side but were not inspected by their Russian counterparts. Thus, this created a short-term panic in the market as a violation of the grain corridor rules could mean termination of the grain corridor deal, lower supply and therefore drive the prices of grain higher. On 19th April, vessel inspections resumed, yet the vision of the grain corridor future remains somewhat unclear. As mentioned in the previous update, the grain corridor deal should be reviewed again on 18th May; meanwhile, uncertainty will create volatility in the market in the short term.
The slight price increase was also prompted by an Eastern European ban on Ukrainian agricultural supplies. Countries near Ukraine, namely Poland, Hungary, Romania, Slovakia, Bulgaria, Czech Republic have been experiencing an influx of cheap Ukrainian grain which has hampered their domestic demand and left local farmers out of business. Hence, Poland, Slovakia and Hungary have introduced a temporary ban on Ukrainian agricultural imports. A Mintec source commented, “The ban should not last long; we see already that Poland has lifted the ban, and I think the rest will do the same. Unilateral actions can't really happen because of the European Union trade policy.” Another Mintec source added, “To be honest, it is Eastern European countries’ fault that they are flooded with grain. They should have sold their grain when the prices were at high levels and not anticipated even higher prices. Look at Germany and France, they sold their grain at the right time at high price levels, and now they have finances and no problem with stock. Overall, I think that the impact of this ban on global grain prices is limited for now because there is enough supply to go around.” According to the latest news from the European Commission, there will be restrictions on imports of Ukrainian agricultural products to Poland, Hungary, Romania, Slovakia and Bulgaria, but the transit remains in place. The European Union is also planning to give 100 million euros as compensation to five neighbouring countries with Ukraine.
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