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All parties agreed to renewing the Black Sea grain initiative (grain corridor) last night. The deal was signed for a further 120 days, with no major concessions (that we know about) be-ing granted. Ukraine had hoped that additional ports would be added to the approved load-ing sites, Russia had hoped that multiple sanctions would be lifted. So as it stands, it ap-pears that the original agreement has been simply rolled over.

 

Talks are expected to be on-going as Russian demands of more ‘free and open’ food and fertiliser exports are yet to be fully satisfied.  The restrictions are based around access to finance and insurance barriers that makes the task of purchasing Russian grain more difficult.

The wheat market sold off quite heavily on the news.  You would think that the market had priced in the renewal of the corridor such had been the headlines leading into this week. However, whether it was some badly placed trades or just lack of liquidity, wheat closed down over 10c having stagnated for most of the week.  Corn initially fell but closed slightly firmer on the news that Mexico had bought 1mmt of US corn. 

Oilseeds have been in the doldrums over the past month.  Soybeans, after having hit highs in October have been gradually selling off.  Coupled with a slumping crude oil price –  now under US$90/barrel – the oilseed complex has worked lower. 

Palm oil  – the barometer for edible oils – is also setting the bar lower having reached an all time record back in March. A quickly rebounding inventory and increased production has seen palm oil prices collapse, which is in turn lowering the base for the other edible oils.  How this continues to play out will depend on the energy sector and hopes that the Chinese economy will turn around as Beijing starts to relax its strict zero COVID policies.

Next week

A lack of bullish news will see the wheat price continue to slide down the path of least resistance.  It will be interesting to see if the big wheat end users see this an opportunity to step in and buy which will help to arrest the slide.

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Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, MPOC, Profarmer, AHDB.

Photo Credit: Madeline Court

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