Russian Invasion causing ‘volatility’ and ‘uncertainly’ in grain markets

The Russian Invasion of Ukraine has continued into its seventh day, and it is having a significant impact on grain markets.

Neil Townsend, Chief Market Analyst for Farmlink Grainfox, said the market is and will remain to be volatile.

“Our hearts and our minds are with the people of Ukraine and the challenges that they are facing, which are very significant, and we are hoping for peaceful resolution as soon as possible,” he noted, “A lot of wheat comes from that region, and Ukraine is a major exporter of corn and some veg oils like sunflower seed oil, and canola and the loss of that availability is going to have a big impact on the market, and the market has been reacting like that.”

“On Thursday, the day of the invasion, we saw future prices go up, Friday there was a little bit of a restoration, but Tuesday prices were back up strong, and I am not exactly sure what’s going to happen, but I think medium-term if we don’t get that supply freed up we are going to see sustained higher prices,” Townsend said.

Townsend said we are in an environment of heightened uncertainly and elevated volatility, and it’s hard to predict and give advice to farmers on what to do.

“There are so many false starts and reversals, so it’s hard to say what exactly is going to happen,” he said. “The overall picture for grains and oilseeds in the world, because of a multitude of things, the fundamentals are favourable so if you can afford to have a little bit of patients on a portion of your grain and on pricing new crop, you might see higher prices than the prices that are available for today, especially in Western Canada.”

He said that the invasion is also going to cause some disruptions.

“There is a lot of open demand out there where countries are assessing their needs. I think just to add to the un uncertainly and volatility, that in a lot of places in the world, when prices go up that can cause some disruptions in the harmonies of the population and you might see more of those disruptions just because food is becoming a little bit more precious now,” he said. “I do think we are in for a more sustained period of higher prices, I just think it will be coupled with an increase in the volatility and uncertainty that we on any given day.”

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