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The prices of cereals and especially of wheat have not yet returned to their pre-war level, but they have fallen. A relief for importing countries hard hit in recent months.
On the cereals market, there has been a wind of normalization that has been blowing since June. The return to square one before the war is not yet a reality, but this summer, some have dreamed of it. This is particularly true for wheat, which had reached 440 euros per ton on the European market in the middle of May, and which fell back to 330 euros in mid-August.
The relaxation on the soybean and rapeseed market is less and less topical, but prices also experienced a respite this summer. The corn market remains the most uncertain. Although it has also come close to pre-war prices, concern about the European and American harvest following the droughts is now a real factor of tension.
Normalization or simple respite?
« The rise in wheat prices made little sense, and was little more than psychological “, explains François Luguenot expert in the market of agricultural raw materials. In other words, an increase linked to market concern in a situation of anxiety-provoking war, and which today gives way to an equally psychological drop according to our interlocutor.
What has contributed to reversing the trend is in particular the impression of a normalization of logistics flows, thanks to the agreement signed between Russia and Ukraine on July 22. However, the volumes transported are still clearly below the usual flows. It was mainly corn that left Ukraine and not wheat, and the Black Sea has not become the highway it used to be again, even though according to the UN 21 bulk carriers left Ukrainian ports in the two first weeks of August.
The volumes of wheat on the market therefore did not jump, but the small advances on the logistics front and the prospects of returning to cruising speed for the region’s exports were enough to reassure. The prospect of a record Russian harvest is also a downside factor. In mid-August, the US Department of Agriculture assessed the volume of Russian wheat at 88 million tonnes, 42 of which are destined for export. The Agritel firm even puts forward a volume of 95 million tonnes. But for now, this Russian wheat has not flooded the market.
Chinese demand remains decisive
This apparent return to equilibrium should therefore be taken with caution. The market should remain very volatile in the coming months given the geopolitical uncertainty and climate risks.
Certainly the cereal and wheat importing countries in particular took advantage of the summer lull to make purchases – some like Egypt had frozen calls for tenders when wheat was at its highest – but prices remain very high due to energy, fertilizer and sea freight costs. They are also subject to Chinese uncertainty.
The level of grain imports from the Middle Kingdom is just as unpredictable as it is decisive for prices.