Rapeseed and wheat prices have soared on Euronext since the beginning of the week. This gives farmers the opportunity to sell their crops at prices they could only have dreamed of a few weeks ago. However, as was the case last year, there is a risk that favourable opportunities will be missed and that farmers will sell too late or not at all in markets that will then fall.
A permanent Russian blockade of Ukraine’s Black Sea ports seems unlikely, but it is possible. In this scenario, prices would move permanently to higher levels. But the impact on different markets would be different.
Corn
With exports of 19.5 million tonnes, Ukraine could become the world’s fourth largest corn exporter in 2023/24 after Brazil, the US and Argentina. Its share of world trade is around 10%. The market can hardly do without this volume. However, a very large Brazilian harvest is currently putting pressure on supply. With the soybean harvest also at record levels, there is not enough storage space in Brazil. They are therefore trying to ship the crop as quickly as possible. A Ukrainian export stop would mainly affect China and Spain, which have been the main buyers in the past. However, short-term price developments on the corn market also depend on the weather in the US. Thanks to a significant expansion of acreage, there is potential for a record harvest. However, this will require rainfall and the current forecasts are “hot and dry”.
Wheat
The USDA expects Ukrainian wheat exports to reach 10.5 million tonnes in 2023/24, or just under 5% of the world’s traded wheat. Given the large export potential of Russia and the EU, a disruption in supplies would not lead to short-term shortages. Moreover, many importing countries can rely on their own harvests for the time being and wait to see how the situation develops. The current price rise will therefore dampen demand on the world market in the short term.
Oilseeds/vegetable oils
The USDA expects Ukrainian oilseed exports (sunflower seeds, rapeseed, soybeans) to reach 6.85 million tonnes in 2023/24, or 3.5% of global trade. In addition, 5.2 million tonnes of vegetable oil (mainly sunflower oil) could be sold abroad, representing almost 6% of world trade in vegetable oils. In the case of sunflower oil, Ukraine is by far the most important world supplier, with 4.75 million tonnes and a share of just under 40%. Although vegetable oils are substitutable, a collapse in Ukrainian vegetable oil exports would support vegetable oil prices and therefore rapeseed prices. However, vegetable oil is much more valuable and transportable than maize, so scarce logistical capacity would be used for these lucrative exports.
For wheat, as for maize, it would be more difficult for Ukraine to do without exports via the Black Sea. This could permanently stabilise the grain markets. The wheat market could receive further support in the coming months if the harvests in Argentina and Australia are smaller than expected. For this reason, wheat on Euronext could well remain at a level of around EUR 250 in the coming months.