Grain market: Black Sea conflict and Brazil-China agreement redefine global outlook

Recent tensions in the Black Sea, coupled with the agreement that allows sorghum to be exported from Brazil to China, are impacting the dynamics of the global grain market. At the same time, investment funds are adjusting their positions, increasing uncertainty about the behavior of agricultural commodities. The escalation of the conflict between Russia and Ukraine in the Black Sea has generated uncertainty in the wheat market and increased transportation costs. According to Ignacio Espinola, senior grain analyst at Hedgepoint Global Markets, the risk of attacks in the region and the collection of an "ice premium" during the winter — which adds $1 to $2 per metric ton to the freight price — are contributing to the pressure on costs. “The increase in freight prices may directly affect the final CIF cost, since shipowners may refuse to operate in the region due to the conflict,” says Espinola. In a significant move, China authorized Brazil to export sorghum, opening up a new ...