The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR [Mintec Code: WROF] was assessed at €230.00/mt, down €3.00/mt week-on-week (w-o-w) on the 11th of May. Grain prices have rallied over the week from the renewed concerns about Ukraine’s exports, especially for the coming season. However, market players believe prices will not increase significantly as the market has plentiful carry-out, especially in the EU. The new supply remains largely in focus, for which some metrics will be available at the end of this week from the USDA. The grain corridor deal remains a key issue, and talks (between Russia, Ukraine, Turkey and United Nations) are set to continue this week. A Mintec source commented, “I heard that Russia has effectively stopped the Black Sea grain deal; now they refuse to register incoming vessels. There are about 90 vessels waiting in Turkish waters. Also, heavy missile attacks have occurred in Ukraine. I think that the grain corridor deal is dead and that it will probably not be extended beyond 18th May. Most likely, Ukraine will continue to use other means of logistics, and the big hope is to ship through the Danube River. But just in a month’s time, the harvest will start in Romania, so I'm afraid that there will be a huge waiting time [queues] for vessel movement through it too.” Another Mintec source added, “we continue to believe that the grain corridor will be extended, and some solutions will be found in the coming weeks. However, an unproven attack by Ukraine on Kremlin last week certainly does not help negotiations. But I think that the grain agreement could be extended for another two months. We will see how the situation develops.” On another note, a pivotal moment is 14th May, when Turkey has its presidential election. The outcome could influence the grain corridor deal, Turkey’s role in the NATO alliance and how it will manage tensions in the Eastern Mediterranean.
Nonetheless, if the grain corridor shuts down, market players do not believe that there will be huge price increases. The EU currently has a huge carry-over for grains and oilseeds. The price increase could only happen in the long term, as there may be supply issues as stocks will start drawing down. Moreover, market sources believe that the price will depend on the Northern Hemisphere crop size in the coming months and that the supply and demand balance sheets do not envisage a large crop reduction from the major exporting countries.
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