Friday, April 1, 2022

Grain markets to remain tight

Co-Bank has issued a report that says the war in the Ukraine is expected to result in tight grain stocks and price volatility for at least two years.

Regardless of when the war ends, its impact on global grain trade will reverberate for some time as markets continually assess real and perceived grain supply shortages and re-adjust risk premiums, according to the report from CoBank’s Knowledge Exchange.

The Black Sea ports are major export points for grains from the Ukraine and Russia which account for 14 per cent of global wheat production and 29 per cent of wheat exports.

They produce four per cent of the world’s corn, but account for 17 per cent of corn exports.

“We expect a significant tightening in available stocks-to-use ratios for both corn and wheat,” said Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. 

“Grain prices will remain elevated and volatile for the foreseeable future. It’s an environment that will require U.S. grain cooperatives and exporters to maintain high capital levels and excess liquidity to fund operational and risk management activities.”