Even beyond the Ukraine war: Farmers expect tense grain markets

Created: 08/06/2022, 08:22

From: Julius Fastnacht

Because of the Ukraine war, the global grain market is tense.

However, the farmers' association assumes that the situation will not change in the medium term.

Berlin – The Ukraine is considered the granary of Europe.

Due to the Russian invasion, around 20 million grains from the last harvest cannot be shipped at present - Russia is blocking the Black Sea ports, which are important for wheat exports.

Politicians therefore accuse Putin of accepting a global famine with his attitude.

The Ukraine conflict is also having a massive impact on grain production in this country, which is probably not a snapshot.

The German farmers' association expects the markets to remain tense for a long time to come.

"Regardless of developments in Ukraine, we assume that the price level will remain relatively high," said Farmers' President Joachim Rukwied.

Because reaction options are limited at the moment.

"We have a fertilizer shortage and exorbitantly high fertilizer prices." There are interruptions in supply chains.

“In this respect, the difficult situation remains.

We probably cannot expect a relatively rapid increase in production.”

Wheat ready for harvest glows in a grain field against a blue sky.

(to dpa "Farmers' association expects grain markets to remain strained for longer") © Arne Dedert/dpa

Because of the Ukraine conflict: Wheat prices extremely volatile

Rukwied explained that international wheat prices had leveled off at a relatively high level as a result of the Russian war against Ukraine, but also fluctuated greatly.

Reports on developments in the Ukraine or on crop prospects in North America led to fluctuations.

Farmers can generally market parts of their grain quantities at previously agreed prices.

Most recently, farmers could have signed preliminary contracts for about 380 euros per tonne of wheat.

"But some preliminary contracts were made at 210 euros before the Ukraine war (...)."

Currently, only partial quantities of this year's harvest are likely to have been contracted in advance, said Rukwied.

“You can already conclude preliminary contracts for the 2023 harvest at EUR 300 per tonne of wheat, which is still EUR 100 above the level of a year ago.” 

Forecast: This year's wheat harvest will probably be average

In the next few weeks, grain and rapeseed will be forming grains in the fields, which is a very crucial phase for the yield.

"In some regions it is still too dry," said Rukwied.

In other areas, which were still very dry a few weeks ago, rain has now fallen.

“There are farmers who are optimistic about the harvest.

And there are farmers who have big worry lines on their foreheads and are still hoping for rain.” Overall, however, there were probably no major swings up or down from an average result.

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The effects of the Ukraine war on European agriculture are also giving politicians food for thought.

Agriculture Minister Cem Özdemir (Greens) wants to campaign for farmers to be able to grow more wheat by adapting EU rules.

(juf with dpa)