AUSTRALIAN grain prices, both futures and immediate cash values, made hefty gains to start the week as markets reacted to further instability in the Black Sea.

News wires and social media late last week and over the weekend were full of rumours of an impending Russian invasion of Ukraine, based on apparent building numbers of Russian soldiers on the Ukrainian border.

Early in the week markets downgraded the threat of military action somewhat, but there remains a hefty risk premium in global grain prices, due primarily to the threat of interrupted supplies out of two of the world’s biggest grain exporters.

Australian wheat futures prices made hefty gains on Monday, with the nearby ASX eastern wheat futures March 22 contract gaining $8 to $366.

The cash market has also been impacted, with the Clear Grain Exchange reporting APW1 grade wheat bouncing close to pre-Christmas highs, with the price in the Port Adelaide zone reaching $400/t, Kwinana trading at $370/t and Melbourne sitting at $375/t.

A weaker Australian dollar, currently at US71c, also helped.

CGX managing director Nathan Cattle said growers took advantage of the surge in pricing, with volumes trading through Clear Grain Exchange reaching a new daily record at just over 102,000t on Monday.

Nick Carracher, Lachstock Consulting chief executive, said the market was constantly changing as new reports came out of the Black Sea region, but said that overall there was a solid risk premium reflecting the geopolitical threat.

However Mr Carracher said it was not the Ukrainian situation that had the market factoring in high values.

“There are other factors in place, there are issues with dryness with the South American row crops so that is a big deal in soybeans and corn,” Mr Carracher said.

“We’re also seeing weather stress building in North America as we move towards the growing season there, so the market is not just all about the Black Sea at present, although it is the major factor.”

Ironically, Mr Carracher said the fundamentals for the Russian and Ukrainian crops in the ground were excellent.

“Crops reportedly have a great cover of snow and are in really good condition.”

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