Black Sea Wheat Supply Disruption Prompts Buyers To Look Ahead To Australian Wheat

The conflict in Ukraine has prompted major global importers to scramble to buy wheat as grain exports from Russia and Ukraine have stalled. Russia and Ukraine typically account for 29 percent of global wheat exports. There are growing concerns that fighting and sanctions will also reduce prospects for this summer's Black Sea wheat harvest.

CHB's head of trading, Ben Dierle, said that starting last Friday, CBH will provide more than 500,000 tons of capacity to meet the new demand. Western Australia will ship 17 million tonnes of wheat, nearly 20 per cent more than the previous record export volume from the major wheat-producing state. But meeting demand in the short term is a challenge as Australia's limited export capacity has been booked for several months, prompting buyers to place orders for more forward positions, while uncertainty in the Black Sea has brought more challenges to contract execution. great pressure.

In the short to medium term, demand for Australian wheat will increase further as Black Sea exports dwindle, Derle said. New demand for longer-term contracts may be more pronounced as markets digest the turmoil in Europe. Buyers initially thought they might have time to consider buying positions in the third quarter of 2022, but that sentiment has now shifted. This will accelerate as there is growing recognition of the reality of massive disruption to global food supply chains.

The Russia-Ukraine conflict is Europe's worst security crisis in decades, leaving supply prospects in the world's main wheat supplying regions in the air. A large portion of this season's wheat exports from Russia and Ukraine have now been shipped, and the next harvest in both countries will be around July and August, so there are fears of shortages.

Australia has just wrapped up a record wheat harvest and this year's production has been larger than expected, as weather has been good for most of the time, which has helped ease global shortages caused by drought and the conflict in Ukraine.

Derle also noted that the canola market was in a "typical dormant period" in the third quarter and could see renewed interest in exporting canola to Europe. Russia and Ukraine account for about 80 percent of global sunflower oil exports.