Grain buyers refuse to panic as Ukraine corridor closes

By Michael Hogan

HAMBURG (Reuters) – Major grain importers in the Middle East and North Africa have reacted calmly to the end of the safe shipping corridor for Ukraine’s exports through the Black Sea this week, European commodity traders said on Thursday.

“There has not been panic buying by importers this time around on the scale as we saw last year when prices skyrocketed after the Russian invasion of Ukraine,” one European grain trader said. “Buyers want to watch a few days and assess the situation, nobody seems to be rushing or panicking.”

U.S. wheat futures jumped 8.5% on Wednesday, their biggest daily gain since the days after the February 2022 invasion, after Russia withdrew from the deal for Ukraine’s safe shipping channel for grains exports and attacked Ukrainian ports.

But wheat is still only about half the record high price of $13.63-1/2 per bushel hit in March 2022 and is only at modest three-week highs.

The Middle East North Africa region (MENA) includes some of the world’s top importers such as Egypt, Algeria and Morocco.

Traders say they have not seen the huge rise in buying this week by importers as seen in early 2022.

Large grain supplies, especially of wheat from Russia and other Black Sea producers including Romania, mean stocks can be bought while harvests are underway in the European Union, so buyers will have large supplies available, traders said.

Usually, international grains import demand is shown by new purchase tenders issued to grain traders by importers. No major new tenders for food wheat have been reported by the main Middle Eastern and North African importers this week although there has been a minor purchase tender for vegetable oils from Egypt.

Iran tendered for 180,000 metric tons of animal feed corn on Monday – saying it would accept offers from Ukraine – but then reportedly rejected offers as too expensive.

“There is no queue of buyers as far as I can see,” another trader said. “The importers lack money and had anyway not been dependent on Ukrainian shipments by sea.”

Traders said shipments through Ukraine’s shipping channel had been small in past months, with only one or two ships sailing on many days in past weeks. Importers had already started diverting Ukrainian purchases to overland deliveries via Romanian and Bulgarian ports or via shipment along the Danube to west EU ports.

“There are estimates Ukraine can export well over 1 million (metric) tons of grains a month on the EU routes,” another trader said. “Some estimates are well over 2 million (metric) tons, these are large volumes.”

Several importing countries have economic difficulties resulting in shortages of foreign exchange, especially Egypt, so are unwilling to pay high prices unless urgently needed.

“Russian is pouring a lot of wheat into the world market and new harvest from the EU from countries like France and Germany in coming weeks mean buyers have a lot to choose from,” another trader said. “I see no supply crisis.”

(additional reporting by Sybille de La Hamaide in Paris, editing by Alexandra Hudson (NYSE:))