Global wheat price rises over Russian threat of Ukraine invasion

Global wheat prices have spiked during the past week. See what’s behind the move and the latest prices.

Russian sabre rattling over Ukraine has set grain markets on fire, prompting Australian analysts to suggest local growers consider selling stock held in storage.

Wheat prices have spiked in the past week over the tensions on the Russia-Ukraine border, with the Chicago Board of Trade rising 50 US cents a bushel, or about $A25 a tonne.

Both countries are now significant producers and exporters of grain.

Thomas Elder Markets analyst Andrew Whitelaw said grain exports from Russia and the Ukraine had grown massively during the past 30 years.

Threats of the Russian military invading Ukraine have fired up global grain markets. Picture: Dimitar Dilkoff / AFP

Mr Whitelaw said their collective five-year average contribution to the global grain trade was 29 per cent for wheat, 32 per cent for barley and 20 per cent for canola.

Russia was expected to be the biggest single country exporter of wheat this year, with the US Department of Agriculture forecasting it would ship 35 million tonnes to buyers around the world in 2021-22.

It is only surpassed by the European Union, which is forecast to export 37 million tonnes.

The USDA expects the Ukraine to export 24.2 million tonnes this season, making it the fourth biggest exporter behind Australia in third place on 25.5 million tonnes.

With threats of war, global markets are nervous about the impact that might have on trade flows, with grain prices rising during the past week.Grain Growers Limited chairman Brett Hosking said grain markets don’t like unpredictability or uncertainty.

“When you have two of the biggest wheat exporters firing shots at each other, that creates uncertainty and I don’t think that is a good thing for global markets long term,” Mr Hosking said.

Another Thomas Elder Markets analyst, Matt Dalgleish, said a similar situation occurred when Russia annexed Crimean Peninsula in the Ukraine in 2014.

But Mr Dalgleish said grain prices spiked back then soon fizzled out not long after the annexation.

“The general feeling is that the Russia-Ukraine situation is not going to progress to a hot war,” he said.

“So the price premium for wheat will start to fade.

“It’s times like this that is gives the (Australian) grower a good opportunity to take advantage of some global pricing that may not persist.”