Those dealing in the grain market have to assess supply and demand, as well as geopolitics said RaboResearch Australia & New Zealand general manager Stefan Vogel.

Mr Vogel said much attention has been focused lately on the elections in the United States and what the outcome would ultimately mean for grain markets.

“But besides the wash up of the US election,” Mr Vogel said, “farmers should also be giving attention to the Black Sea region’s exports and the progress of its current crops.”

He said exported volumes from the Ukraine so far in the second half of calendar year 2024 are much stronger than those in the previous two seasons, when Ukrainian ports were blocked and exports struggled.

Last season, Mr Vogel said, Ukrainian exports only started to surge in the first half of the new calendar year (when Australian crops had been harvested and needed to move into export channels).

“So Australian farmers may want to hope for a reversal this season with Ukrainian exports running out of steam when our crops are harvested.”

Mr Vogel said looking at Russian exports, the picture might be similar, with volumes so far strong in the second half of 2024, despite a smaller crop and lower inventories. “Once again, one might hope that Russian exports dry up more than in previous seasons once the new year (2025) starts. If this turns out to be the case, Australian farmers may benefit from less export competition for wheat, barley and canola exports out of the Black Sea region.”

In addition, he said, the market is looking at the progress of the war in Ukraine and while attacks, including those on grain-export infrastructure, occur regularly, it seems unlikely that Ukrainian exports would be forced to halt for an extended period. “The country’s exporters have been creative and relentless in their efforts to move grain volumes and we expect this to continue in 2025.”

Mr Vogel said another key market topic is the recent dry planting for the current grain season in Russia and Ukraine, resulting in delayed plantings well beyond the optimal timing. “And despite some rain in several regions since, this still means the risk of winter kill, if a harsh winter does occur, is higher than usual.”

“But it’s not only the newly-planted Russian and Ukrainian crops that might stand on shaky feet because of poor development, the risk that heavy winter kill might reduce the Black Sea’s 2025 production is also on “shaky ground”. For now, the market is unwilling to bet on a sizeable crop failure in the region by adding any notable price premiums.”

Lastly, Mr Vogel said consideration needs to be given to whether China will return as a buyer to the grain arena. “The country has not imported any noteworthy volumes of Australian wheat since April and imports of Australian barley have also slowed considerably. And farmers may well be wondering if and when China will return to the market.”

Mr Vogel said the reason for the low purchase levels is that China is heading towards its best grain production ever, driven by record wheat and corn crops. “And the Chinese government has put pressure on grain companies to buy domestic grain rather than imported volumes,” he said.

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