The wheat market finally woke up to the threat of Black Sea export constraints, but the canola market has not, says an analyst.
“The commodity markets are just now responding to this,” said Western Producer grain market analyst Bruce Burnett.
“But I think it’s a very, very big deal for both Russia and Ukraine and consequently for the world market.”
North American wheat futures all took a big jump on Aug. 26 in response to ongoing attacks on port infrastructure and ocean vessels in the Black Sea.
“For both oilseeds and for wheat, this is going to be a big, big issue as we move through this marketing year,” said Burnett.
WHY IT MATTERS: The loss for Black Sea canola shippers might be Canada’s gain.
Drone attacks are forcing Russia to ship through more “arduous” alternative routes such as the Caspian Sea and Baltic Sea.
Meanwhile, Ukraine is having to rail product into the European Union or use its ports located on the Danube River.
However, that is far from an ideal solution.
Russia is now targeting ports on the Danube, water levels on the river are record low and Reuters is reporting that up to 70 vessels were lined up near Danube’s Sulina Canal as of late August, waiting for access to Ukrainian ports to load grain for export.
The EU is the primary market for Ukrainian canola. Burnett said some of that demand may shift to alternative suppliers such as Australia and Canada.
However, Canadian canola will also be in high demand domestically and from traditional export markets such as China, Japan and Mexico.
Click here to see more...