Ukraine-Russia War no longer seems to be triggering high grain prices, as buyers become more complacent

It could be seen as market complacency, as the world becomes more comfortable with the Black Sea Grain Initiative.

Compared to the end of February, canola prices dropped about $100 to $700, APW wheat dropped from $410 to $380 and feed barley dropped $20 to $310.

However, there continues to be risk in the grain markets, which doesn't appear to be priced into values as much.

Given the continued Russia-Ukraine conflict, IKON Commodities chief executive officer Ole Houe said you would assume wheat prices would continue to remain elevated.

"The fact that grain has continued to flow quite freely out of the Black Sea by the Ukrainian export corridor and from Russia too, has simply gotten the world comfortable that the war does not threaten supply to any great degree," Mr Houe said.

Rabobank agricultural analyst Dennis Voznesenski said he doesn't believe the volatility is going away, and overseas markets have probably come down too much in the past months.

"I think the markets are too complacent at the prices we are right now," Mr Voznesenski said.

"I think there's a lot more risk around than what is priced into the global market right now."

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This is especially true when it comes to the Black Sea Grain Initiative, which expires today, Thursday, May 18.

In the past months, grain markets have become volatile when it was time for the renewal of the Grain Initiative, however this month the markets seem relatively calm.

"I'm still of the view that the markets are too complacent to what's happening in the Black Sea, they are just assuming that Russia is going to re-sign, which might not be the case," Mr Voznesenski said.

Chicago Board of Trade wheat has declined by 43 per cent in the past year, however this time last year wheat was reaching record highs due to the Russian invasion of Ukraine.

Initially, global markets were "absolutely freaked out" by the invasion of Ukraine, but markets have since stabilised - given that Ukraine has managed to continue to export large amounts of grain.

"This has created a flood of wheat in the market, and that's really pushing prices down," Mr Voznesenski said.

In the near term, Mr Houe believes global markets will continue to slide, however in the medium to long-term he thinks the market is "under-pricing" the global market risk.

This, paired with demand that will match production next year - something that typically happens a year after a drop in global demand - makes Mr Houe think global markets will recover any losses towards the end of the year.

CBH chief marketing and trading officer Jason Craig said the market was reasonably comfortable with supply - given Russia's record crop and Europe's reasonable harvest.

"I think the main factor is that Ukraine as an exporter is not as important as in previous years, as production there is declining due to the war and most buyers are reasonably comfortable on the supply side," Mr Craig said.

"So the impact of the Ukraine situation has become less of an effect on the market."

In their most recent report, NAB forecasted the Australian dollar/United States dollar exchange rate rising to about US78c by the end of 2023 and US80c by the end of 2024.

A higher Australian dollar will decrease the attractiveness of Australian grain.

Barley prices haven't tracked too much movement in the past month, despite some analysts expecting a jump in price after China's announcement to review anti-dumping tariffs.

In comparison, French barley prices experienced a large dip after the announcement, to as low as $US230 per tonne.

The canola market remains saturated and oversupplied after good harvests from Canada and Australia, however in the longer term

Mr Voznesenski believes there is still strong demand to support pricing.

Mr Craig said over the past year, the margin between international values and the value Australian growers were receiving was narrowing due to increased supply chain efficiencies.

"I think this is an important point, where previously the supply chain wasn't performing as strongly, grain prices in Western Australia didn't necessarily reflect international values," he said.

"It's positive for growers because that's showing that trade margins have come in significantly and what you're seeing is a market that is functioning better on the basis that we can export more of the crop."