IT has been a tumultuous week in the world with grain markets not immune.
The war in Ukraine has seen most major grains hitting new price highs.
Chicago Board of Trade (CBoT) May 22 wheat futures reached a new contract high of 1134 US cents per bushel last Thursday, likely to be broken again this week.
In Australian dollar terms that is $569 per tonne, much higher than where local markets are currently pricing.
Even though local values haven't seen the full upside of what is happening in offshore markets, prices have still rallied strongly.
Russian and Australian wheat values have jumped higher since the Russian invasion of Ukraine began.
The conflict in Ukraine is casting doubt on grain exports out of the Black Sea region from which both Ukraine and Russia export much of their grain from.
Ukraine still has seven million tonnes of corn and 6mt of wheat estimated to be exported but with ports closed this appears unlikely in the short term.
Less corn and wheat exported from Ukraine will mean trade flows need to adjust.
Importers will need to look for alternative feed stocks, whether that is corn from the United States or cereals from Australia.
The deficit from Ukraine will eventually be filled by South American exports but their exports are estimated to be reduced due to dry conditions decreasing production prospects.
In the short term, the war in Ukraine is likely to impact physical grain exports and push the prices up of grain, fertiliser, and fuel out of Russia as supply chains are disrupted and economic sanctions weigh on the Russian economy.
It is anyone's guess how long the conflict will last and the impact it will have physically and economically on the upcoming corn planting in Ukraine and spring wheat plant in Russia.
Uncertainty creates volatility in grain markets and right now the conflict in Ukraine is helping to elevate Australian wheat, barley and canola prices which is beneficial for growers with grain left to sell.
Current and forward season pricing is well above average at the moment, so it is worth considering further sales.
However, after two record breaking winter cropping seasons and higher than usual input costs, consider your production risk before overcommitting.
- More information: Visit profarmer grain.com.au or call 1300 302 143.
Want weekly news highlights delivered to your inbox? Sign up to the Farm Weekly newsletter.
