Black Sea conflict boosts wheat prices in Southeast Asia, Australia

Black Sea wheat offers into Southeast Asia rose $10/mt overnight, with Romanian and Bulgarian feed wheat offers to Vietnam for August to September shipment said to be at $282/mt CFR on July 20.

The strength in European markets has spilled over into Australian markets, where domestic cash prices have firmed.

“FOB offers will be up at least $10/mt, but it is a bit early to say where fair value should be,” a trader based in Australia said.

Platts, part of S&P Global Commodity Insights, assessed Australian Premium White FOB Australia at $296/mt on July 20 and Australian Standard White FOB Australia at $276/mt, $3/mt and $4/mt, respectively, higher day on day.

Wheat prices rose in US and European paper markets due to ongoing uncertainties in the Black Sea region, traders said.

The Chicago Board of Trade September wheat futures jumped 57 cents/bushel to close at 727.50 cents/bushel July 19, while Paris September milling wheat futures rose Eur19.25/mt ($22/mt).

Platts, part of S&P Global, last assessed 11.5% EU Wheat FOB CVB basis Constanta at $268/mt July 19, up $15.75/mt on day.

“Cash values are trading higher, but it is hard to determine the impact on FOB prices,” a trader based in Western Australia said.

Ukraine has said ports on the Black Sea have been under attack since July 17, after Russia walked away from the Black Sea grain initiative, which had allowed exports of agricultural products from Ukraine via three Black Sea ports — Chornomorsk, Odesa and Pivdenny.

The UN and Turkey brokered the Black Sea Grain Initiative on July 22, 2022.

Ukraine said Russia has attacked the ports of Chornomorsk and Odesa, among other areas in its southern region, in a series of attacks during July 17-20.

Higher prices are not the only deterrent for buyers in Southeast Asia. Multiple sources said fears of execution risks for Black Sea grains shipments have increased significantly this week.

Feed buyers in the region were expected to remain on the sidelines until more clarity emerged regarding the safety of shipping routes for Black Sea grain.

“Buyers in Thailand are covered until October. They have been price-checking this week but there are little to no firm offers. Sellers want to see how the [Black Sea] situation goes first,” a trade source based in Thailand said.

A grains trader in Vietnam said: “I think all our buyers are very worried about Black Sea origins after the recent developments. We have not heard much business done to Vietnam from the Black Sea recently.”

Following Russia’s announcement that ships traveling to Ukrainian ports, regardless of their flag state, would be considered potential carriers of military cargoes, some sources have expressed concerns that it may endanger shipments from neighboring Black Sea ports in Bulgaria or Romania.

Ukraine’s President Volodymyr Zelensky July 18 reached out to the UN and Turkey to continue the Black Sea grain deal despite Russia pulling out of the key agreement.

However, local media reports from Turkey said Turkish officials have informed Ukraine that it may not be able to provide protection to vessels carrying farm products from Ukraine.

However, a grains trader said: “I doubt Russia will do anything that drastic as to endanger CVB ports. Romania is a member of NATO and the EU, and I doubt they will want to drag them into the impacts of the war, especially when food security is a hot topic again.”

Tags: Bulgaria, Odesa, Romania, Pivdenny, prices, US, wheat, Black Sea, feed wheat, Chornomorsk, shipments, European, Australia, markets