Canada Markets

Markets Rally on Supply Concerns in the Black Sea Region

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson
The blue bars represent Ukraine's estimated wheat exports in 2012/13 and 2013/14, plotted against the primary vertical axis. The red bars represent the same for Russia. Current USDA forecasts indicate an expected 10 million metric tonnes to be shipped from Ukraine this crop year, with another 16.5 mmt from Russia. Combined, this volume makes up an estimated 16.7% of estimated global trade, as shown by the black line with markers against the secondary vertical axis. (DTN graphic by Nick Scalise)
The blue bars represent Ukraine's estimated wheat exports in 2012/13 and 2013/14, plotted against the primary vertical axis. The red bars represent the same for Russia. Current USDA forecasts indicate an expected 10 million metric tonnes to be shipped from Ukraine this crop year, with another 16.5 mmt from Russia. Combined, this volume makes up an estimated 16.7% of estimated global trade, as shown by the black line with markers against the secondary vertical axis. (DTN graphic by Nick Scalise)

While the likes of Bunge and ADM are reporting no slowdowns at their respective operations in Ukraine, the issues in this region of the world are far from resolved and the move in the markets today indicated the growing concerns. May red spring wheat closed 16 1/4 cents higher, May red winter wheat closed 26 cents higher and May soft red winter wheat ended 29 1/4 cents higher.

Ukraine is expected to be the sixth largest wheat exporter in the world in both 2012/13 and 2013/14, according to USDA data. In the 2013/14 crop year, Ukraine is forecast to export 10 million metric tonnes, up 39% from last year, while roughly 6.3% of the 159 mmt projection for global trade for the crop year. 

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The issues surrounding global grain supplies are compounded further as governments around the world condemn Russia for its aggressive actions which could escalate to various trade actions against Russia. Russia is expected to export 16.5 mmt in 2013/14, up 46% from year-ago levels, or 10.4% of the projected 159 mmt of global trade.

The blue bars and the red bars on the attached chart indicate the year/year growth in projected wheat exports from these two countries, as measured in metric tonnes against the primary vertical axis. The black line indicates the combined projected Ukraine and Russian exports as a percentage of projected global trade, measured in percent against the secondary vertical axis on the right. The combined global share of projected wheat exports from these two countries is targeted to grow from 13.5% in 2012/13 to 16.7% or a total of 26.5 mmt of the projected global trade of 159.39 mmt.

Should conflict in this part of the world drive international buyers to North American supplies, Canada is ill-prepared for such an event, given the shipping delays already faced in getting product to market. Reports today suggest that even Canadian mills are facing the danger of work slowdowns or stoppages related to the unreliable deliveries of wheat and oats.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

(ES)

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The blue bars represent Ukraine's estimated wheat exports in 2012/13 and 2013/14, plotted against the primary vertical axis. The red bars represent the same for Russia. Current USDA forecasts indicate an expected 10 million metric tonnes to be shipped from Ukraine this crop year, with another 16.5 mmt from Russia. Combined, this volume makes up an estimated 16.7% of estimated global trade, as shown by the black line with markers against the secondary vertical axis. (DTN graphic by Nick Scalise) 
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