Image: Pixabay
Russia is the world's largest wheat exporter and Ukraine ranks 4th in this ranking. Together, they are responsible for around 30% of the world wheat export market, which corresponds to 210 million tons. It is inevitable that the Ukraine crisis will directly affect global wheat prices.
If the armed conflict continues with resistance from Ukraine, the suspension of shipments in Ukrainian ports will continue and importers will concentrate their demands on other exporters, such as the United States, Australia, Canada and Argentina. This could keep prices at high levels. The global wheat market, in the last two years, was strongly affected by climate crises in leading countries and by Covid, which impacted the positioning of safety stocks and maritime freight, whose values increased by up to three times.
For all these reasons, the world wheat market has sharply priced itself, indicating that it sees the crisis prolonging. Until the day before this note, 8 days after the invasion of Ukraine, cereals rose 35.7% in the United States. Argentina, our largest supplier, follows this trend. The upward climb has not yet stabilized and continues to rise sharply.
For all these reasons, the world wheat market has had great difficulty in pricing the cereal, as this depends on the duration and scope of the crisis. This view of the market has generated fluctuations in prices. In Argentina, our largest supplier, prices are also fluctuating. Therefore, a greater definition of the breakdown of the crisis will be necessary for market positioning.
Abitrigo's analyzes indicate that Brazil will not have cereal supply problems in the short term, as Argentina has already signaled that it has enough wheat to meet Brazilian needs, in addition to the fact that the volume coming from Russia is very small and we have no record of purchases of wheat from Ukraine.
The same does not occur in relation to prices in the global market and in the domestic market. One factor that could alleviate this increase a little, but far from being significant, is the drop in the value of the dollar in relation to the real in recent days, which could offset, to some extent, the recent increases in Chicago. But the tendency is for the price level to remain very high over the next four or five months, with a forecast of stabilizing or starting to fall from July/August onwards, with the arrival of the northern hemisphere harvest.
{module Form RD}
Another issue that could impact the price of wheat is the uncertainty regarding fertilizers, as Russia is one of the largest producers in the world and also a supplier of this product to Brazil, in addition to the influence of investment funds, which have increased their positions in commodities. , increasing price volatility.
Wheat in Brazil was and continues to be a serious problem, due to dependence, as the country remains very vulnerable. 60% of the internal demand for wheat is met by external imports and, of this total, 85% originates from a single country, Argentina.
The wheat market has faced many issues in recent years, such as the pandemic, shipping and now this issue of conflict. We are, once again, experiencing a period of great challenges for the entire wheat sector. More than that, this conflict is a moment of great tension and uncertainty for the world, which must be followed with caution and attention by everyone.
By: Eliza Maliszewski | agrolink
