The turmoil caused by the war in Ukraine is further destabilizing the grain market. Russia announced on Saturday that it was suspending its participation in the agreement on grain exports from Ukrainian ports, in response to a drone attack on its ships in Crimea.
corn fears
Thanks to this agreement, negotiated by the UN and Turkey last July, millions of tons of grain were able to leave Ukraine through a maritime “corridor” despite the ongoing war in the country. A crucial agreement, because Ukraine is one of the world’s leading exporters.
Since the beginning of the maritime corridor, about 9.5 million tons of grain have left Ukraine, 40% of which goes to the European Union. There is no shortage of wheat to fear in Europe “because the EU is not an importer”, emphasizes Arthur Portier, Agritel consultant. It is more on the corn side that we were able to observe tensions in the European market: of 9.5 million tons of cereals that passed through the corridor, “there are 4 million tons of corn and 48% of this corn entered the EU “, a major importer of Ukrainian corn, explains.
animal feed
In Europe, maize is mainly used for animal feed on farms. If imports from Ukraine decrease, they will have to be compensated with wheat or barley, especially since the European maize harvest has been poor due to drought.
Grain prices, already at high levels, thus rose sharply on Monday morning: December wheat futures contract prices were up more than 6% by 11 a.m. in Chicago, while the of milling wheat of the same maturity rose by almost 4% in Paris.
If in the short term the rise will be sharp, it is difficult to anticipate the evolution of cereal prices in the coming weeks, since the uncertainty is great. Prices could drop if talks resume quickly with Russia in the coming days, or remain at this level if talks fail.
Several cargo ships loaded with Ukrainian grain continued to use the shipping lane after Moscow’s announcement, with Turkey saying it would continue to uphold the deal, but Russia warned it would be “difficult” to implement the deal without it. The Russian power even went so far as to evoke “a more risky turn” on Monday if the agreement was applied without him.
“In conditions where Russia talks about the impossibility of ensuring the safety of navigation in these areas, it is difficult to implement such an agreement,” Kremlin spokesman Dmitry Peskov told reporters when asked about the decision. possibility of continuing this agreement without Russia and quoted by AFP. .
rising costs
It is the breeders who should suffer from this situation, already facing an animal feed outbreak since the beginning of the year. In addition, this rise in cereal prices, whether temporary or lasting, adds to those of other raw materials, which have risen since the beginning of the year, as well as the energy crisis and the increase in production costs, which affect the entire food chain. Enough to keep up the pressure on food prices, which continue to rise sharply this month.
Source: BFM TV
