Tensions along the Ukraine/Russian border – and the possibility of war between two of the world’s leading suppliers of corn, sunflower oil and wheat – have boosted futures prices, while cash market participants have largely played down the impact of developments, AgriCensus wrote.
Trade sources in the region remain generally unconcerned, according to the 25 January report, with supply and price levels the main issues. However, fears are growing in some quarters.
“You can’t ignore that’s the only topic nowadays and makes any trade decision very difficult to make, not to say impossible. I think no one wants to have a big position … until things get clearer,” one trader said.
There has already been a noticeable drop in currency values – the hryvnia has fallen by 4% and the rouble by 5% since the start of January – and this is pushing up domestic prices, which in turn is reducing traders’ margins, according to the report.
“[The standoff] hasn’t yet been reflected in the trade but one of the reactions we see is the increase of the gap between Ukrainian and Romanian corn prices,” a Ukraine-based trader added. “Plus, it could [cause] issues with banks and insurance coverage.”
Concerns about the Russia/Ukraine situation had led to higher prices and bids, trade sources said, with buyers paying to secure corn from neighbouring Romania.
“It is making trade lines [bank finance] more difficult to secure,” a third trader also said.
The biggest concern is a potential blockage of Black Sea ports, according to the report.
