Grain Prices Soar as War Disrupts Exports from Ukraine and Russia

The global grain market is experiencing significant price increases due to worsening weather conditions and disruptions in exports from Ukraine and Russia. In an interview, Stefan Vogel, General Manager of RaboResearch in New Zealand and Australia, attributed the rise in prices to these two key factors.

Vogel noted that the global supply-demand balance has tightened in recent weeks, with heat and drought affecting wheat and rapeseed yields in Europe, while corn crop outlooks have deteriorated in several regions. The United States is also facing dry conditions across the soybean and corn belt.

The war has had a greater impact on logistics, with strikes affecting vessels, export grain elevators, and loading berths. Russian grain exports have more than halved, while Ukrainian exports have fallen by over 80%. Alternative routes for Ukraine remain challenging, with rail shipments to Europe being expensive and low water levels on the Danube creating logistics constraints.

Rabobank does not rule out a rapid change in the price situation. If exports from Ukraine and Russia remain disrupted, prices could continue to receive support. However, if agreements are reached on safe vessel passage and export volumes recover to levels closer to normal, the market could quickly come under downward price pressure.