Grain exporters are looking for alternative sources of wheat and corn as a Russian invasion cuts off Ukrainian supplies, with European Union producers Romania and France being used to cover some nearby loadings, traders said on Friday, February 25.
The conflict has rattled grain markets, with European wheat futures surging to a record high on Thursday, February 24, as it raised the prospect of stalled shipments from Ukraine and Russia, which together account for nearly a third of world wheat exports and almost a fifth of global corn exports.
Moscow’s military assault led Ukraine to close its ports on Thursday and they remained shut to commercial shipping on Friday.
Romania, a major grain supplier that, like Ukraine, exports through the Black Sea but outside the conflict zone, was seen as an obvious backup option for merchants.
Traders said about 400,000 to 500,000 tons of Romanian wheat and 200,000 to 300,000 tons of Romanian corn was bought since the fighting in Ukraine started, largely for immediate shipment or loading in March and April.
Ukraine is a key wheat exporter to Middle Eastern and Mediterranean importers including Egypt, Turkey, Italy, and African countries.
“There was increased demand for Romanian wheat with their ports outside the war zone,” one trader said.
“It was mainly from multinationals seeking quick supply cover, volumes were substantial on both Thursday and Friday.”
Part of the demand was thought to cover recent sales to Algeria, a destination where Ukrainian and other Black Sea origins have been gaining market share.
Ukraine’s massive corn exports supply customers including China, Spain, the Netherlands, Iran, and South Korea.
As well as Romanian corn, trading firms had booked at least several small vessels of French corn to cover nearby shipments to EU destinations like the Iberian peninsula and the Benelux countries, traders said.
There was also talk of French wheat being bought to replace Ukrainian supplies. Some traders said several hundred thousand tons may have been booked, although others cited smaller initial volumes for immediate needs, with availability of rival origins like Argentine wheat reducing interest in French supplies for further-away periods.
Importers had also enquired about German wheat but high prices deterred significant buying, traders added.
Some merchants were also waiting for further developments in the conflict after Thursday’s market panic.
“If there is a quick end to the fighting, ports in Ukraine are likely to reopen quickly,” another trader said. – Rappler.com