Because Russia and Ukraine are both big wheat exporters, their wheat exports account for about 29% of the world's wheat exports. Therefore, after the conflict broke out, the market was worried that the supply of wheat would be blocked, so the wheat price rose, and the Chicago wheat futures price once rose to a new high of 10.
However, in May and June, as the market digested the conflict and the Fed unexpectedly raised interest rates, the international wheat price began to fall, which once retreated all the gains since the conflict between Russia and Ukraine.
Later, with the efforts of many parties, Ukraine's grain exports gradually resumed, the market supply became loose again, and wheat prices continued to fall.
But recently, with the release of two news from Russia, the global wheat price has risen again.
First, according to Russian media reports, four states in southeastern Ukraine-Lugansk, Donetsk, Zaporoze and Kherson-will hold a referendum on joining Russia from September 23rd to 27th.
The wheat production of these four States accounts for about 20% of the total wheat production in Ukraine. The market expects that these four States may face sanctions after the referendum, which means that wheat exports in these regions may be affected.
Another news is that on September 2 1, Russia announced some military mobilization.
The market generally believes that this move means that the Russian-Ukrainian conflict will not end in the short term, and even the war may face escalation.
Affected by these two news, Chicago wheat once again rushed to 900 cents/bushel on the same day, reaching a high level in the past two months, with an increase of 7.9%, and the next day's increase reached 7. 15%.
Then, with the rise of international wheat, will the global grain market start a new round of changes?
At present, although the price of wheat is the first to rise, it still stays at the news level, that is, after the news is released, the market is worried about the future trend of wheat and responds accordingly.
However, with the interweaving of various influencing factors, the global grain pattern will continue to evolve:
1, wheat stocks are low, and effective supply is declining.
Globally, wheat has been in a tight balance between supply and demand in recent years, and according to the report of the US Department of Agriculture, the estimated value of global wheat ending inventory in 2022/23 is at a low level in six years.
Although the market supply has eased with the resumption of Ukraine's grain exports, it is certain that Ukraine will completely reduce the grain crop output in the new season due to the conflict.
According to the data of EU monitoring institutions, the wheat output in Ukraine is estimated to be 26.24 million tons in 2022, down by 18% year-on-year, and 4% lower than the five-year average. Corn production is expected to be 32.027 million tons, down 24% year-on-year and 5% lower than the five-year average.
This means that the food supply in Ukraine is limited.
On the other hand, Russia is the largest wheat exporter in the world. Although Russia has a bumper harvest this year, Russian agricultural institutions predict that in 2022, Russian wheat will reach a record 97 million tons, and wheat exports are expected to increase to 46 million tons.
Although Russia intends to expand its grain exports, according to the recent actual export data, its performance is not good.
From July to August this year, Russian wheat exports decreased by about 1/4, the lowest level since 20 17-20 18 years.
This means that the effective supply of wheat in Russia is actually reduced.
2. The uncertainty of the Black Sea Passage has increased, and the global grain pattern has accelerated.
Another concern of the market is that the uncertainty of the situation in the Black Sea increases with the conflict, and the Black Sea is an important transportation port. Once it changes, it will have a far-reaching impact on food supply, which is almost irreparable in the short term, or it is likely to trigger a sharp rise in food prices again.
On the other hand, although Russia has a bumper harvest, its exports are facing a "bottleneck". Where is it stuck?
First, stuck in the exchange rate and high export tariffs, Russian operators' costs have increased, export profits have declined, and more have turned to the domestic market;
Second, Russia's grain cannot enter the international market smoothly because of the all-round sanctions imposed by the United States and the West.
For example, Russian grain buyers can't get bank guarantees and loans, and ships can't get insurance, which makes many buyers have to give up looking for other food sources.
Under the pressure of grain harvest and sanctions, Russia began to readjust its export direction and look for new markets.
As a result, the original pattern of global food supply and demand has been broken, and food is an important basis for survival. Therefore, countries will increase efforts to stabilize the sources of grain imports and exports, thus accelerating the evolution of the global grain pattern.
The tight supply of chemical fertilizer pushed up the food price.
Russia is not only a big food supplier, but also a big chemical fertilizer supplier.
According to FAO data, in 20021year, Russia was the world's largest exporter of nitrogen fertilizer and the second largest supplier of potash fertilizer and phosphate fertilizer.
Russia's fertilizer export faces the same problems as grain. As "grain in grain", fertilizer will have an important impact on grain production.
Next, the southern hemisphere will enter the sowing season, while Brazil and Argentina in South America are big importers of chemical fertilizers. For example, in Brazil, a big agricultural country, about 70%-80% of chemical fertilizers are imported.
According to the statistics of the Brazilian government, nearly 8 1% of the 40.5 million tons of fertilizer used in Brazil last year was imported, of which 20% came from Russia.
60% of Argentina's 6.6 million tons of chemical fertilizers are imported, of which 15% comes from Russia.
In addition, Mexico, Ecuador and Colombia all depend on Russian fertilizers to varying degrees.
It can be seen that although chemical fertilizer has no influence on the grain price itself, its far-reaching influence on grain cannot be ignored.
Although global food prices have fallen for some time, its bottom support is still very obvious. With the constant change and development of the influencing factors of the grain market, the price center of grain and agricultural products is forming a new thrust.