At the start of last week week, the grain export corridor from Ukraine deal was off, and the market barely had a reaction.
I was surprised, as taking a massive volume of grain off the market should have a big impact on prices.
Reducing supply equals higher pricing, which is basic supply and demand economics.
Many thought that it was a case of the boy who cries wolf.Well Putin showed that no deal meant no deal last Wednesday.
Russian forces attacked the grain-loading infrastructure in Odesa and Chornomorsk.
This spooked the market and caused a A$33 per tonne rise in wheat futures.
One of the largest rises since the start of the invasion.
What to note about the situation:
1. Russia has stated that grain vessels transiting to Ukrainian ports could be considered military cargoes.
2. Ukraine has also retaliated that grain vessels to Russia could also be targeted.
3. Getting a grain deal back on the table will take some strong negotiating.
The initial impact of the invasion was that Ukrainian grain wasn't flowing.
There is now a risk that Russian and Ukrainian grain will not flow.
The price reaction experienced in the futures market may not flow through immediately to the physical market.
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