The loss of Ukrainian grain continues to influence feed markets as among the major exporters, Ukraine accounts for about 17 per cent of the world's shipments of corn and 18pc of the world's barley.
With no end in sight for the Russo-Ukrainian war, world trade flows will need to continue to readjust as world stocks of feed grains reach extremely tight levels.
Even if the conflict was to end in time for Ukraine's 2022/23 harvest, the country is expecting significant cuts to planted area of spring crops and diminished yields due to shortages of fertiliser, fuel and workers.
Spring planting of barley is currently at 60pc of the planting area in 2021, compared to 91pc at this time last year.
Brazilian weather has also been playing a major role in feed grain prices as the second (Safrinha) corn crop is threatened by dry conditions. Central Brazil is forecast to remain dry into early May. Due to sufficient soil moisture in late March early April, the worst case yield scenario will likely be avoided.
However, if these dry and hot conditions continue, which is likely due to an ongoing La Nina, cuts to production are likely. Despite this, CONAB actually raised expected corn production by 2 million tonnes, to a total of 115mt in its April update. Private analysts remain unconvinced, with estimates ranging between 106-110mt.
United States corn futures have also been trending higher on the back of poor Brazilian weather and strong demand for ethanol.
The US has begun planting its new season corn, however wet and cold weather has been delaying the process.
Currently only 7pc has been planted compared to 16pc last year and the five-year average of 15pc. If the weather continues to delay seeding, we could see a significant portion of the US corn crop planted outside the ideal window.
Australian barley has remained some of the cheapest in the world, resulting in expansions into new markets. According to the latest data from the ABS, Australian exports of feed barley for February were 796,000 tonnes, up 46pc from the previous month.
Saudi Arabia has been relying heavily on Australian feed barley, accounting for 36pc of our exports for the 2021/22 marketing year so far.
But the real highlight of the February barley export data was cargoes going to Canada and Netherlands. These shipments highlight the scarcity of barley in the northern hemisphere and the competitiveness of Australian prices.
While Europe has bought barley in bulk from Australia in previous years, Australia last shipped barley to Canada in 1997.
SA barley prices have remained well supported and have been steadily trending higher, now sitting around $410 a tonne on an Outer Harbour basis for 21/22 season. The spread between wheat and barley has also been extremely tight, ranging between $5 and $20 for the past month.
New season prices have also been tracking higher, currently around $340/t. In the coming months, weather in Brazil and the planting progress in Ukraine will be key for the development of new season prices.
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