Through the 2H February, spot corn and wheat prices underwent the largest selloff since early December on an optimistic 2023/2024 production outlook and concerns surrounding the macroeconomy. This is certainly a positive development for those hoping food inflation, which remains at sky high levels, could show signs of easing. Nonetheless, prices have attempted a small rally through early-March, a reflection the market could be oversold. Seaborne trade flows, especially for corn, struggled mightily in February, pacing well under year earlier levels. This update dives into the specifics.
Food inflation has taken hold across the world. In places like America and Europe, food prices were up by more than 10% y/y in December. Nonetheless, the situation seems to be improving. Wheat prices have eased considerably off the highs seen in the initial months following Russia's invasion. Food inflation in m/m terms is already showing signs of a slowdown. The grain deal, which came into effect last August, is clearly having an impact. Ukraine managed to ship 4.75 Mt in total seaborne wheat tonnage through the final five months of the year.
On October 30th the Russian Federation suspended their participation in the Black Sea Grain Initiative. Instead of freezing the current backlog of laden vessels, Turkish and UN delegations have instead reacted swiftly by increasing inspections in the Marmara Sea.
The Black Sea is one of the regions the early users of Kpler Grains & Oilseeds watch the most. Let's have a look at a few interesting moves identified by Madeleine Overgaard, Grains Analyst.
Trade flow volatility key driver for new offering aimed to mitigate food security challenges.