Is a Grain Corridor 2.0 arrangement in the wind? There are moves afoot to try to un-derwrite vessels sailing from Ukraine’s deep seaports in a move to try and incentivise traders and ship owners to take the risk. How this would work exactly in an active war zone remains up for debate. Russia has, after all, stated it will target vessels heading into Ukrainian ports.
If we assume, that this plan does go ahead, and Ukrainian grain once again has a ‘reliable’ channel through which to export its grain this could strip away any risk premium that has been built into the market. While major exporter stocks are tighter year on year, the freeing up of Ukrainian grain would have an immediate impact on global food prices.
The Egyptian Grain Authority (GASC) announced a tender over the weekend for 300kmt of wheat. After all 30 offers were considered, a relatively paltry 60kmt was ordered from Romania at US$256/t FOB. Russian bids remained firm at US$270/t (their official floor) which the Egyptians politely declined. GASC has previously stated they were unhappy that the competitive nature of sourcing grain had been lessened with Ukraine’s annexation from the Black Sea.
A good spring in Russia has seen SovEcon raise Russian production from 87mmt to 92mmt with the Northern/Central Spring wheat crops better than expected. This will again place Russia as the #1 wheat exporter in the 23/24 season and the likely price setter for some time to come. By setting an artificial floor price and kicking out the multinationals, Russia is effectively setting up a single-desk wheat export policy, whereby if you want their grain, you have to pay their price.
The US Profarmer tour is being run with participants finding corn and bean yields close to expectations. Current findings have yields slightly above the 5-year average at 175 bushels/acre for corn (vs the 5-year average of 173 bushels/acre) and 50.9 bushes/acre (50.0) for beans. It justifies the dip we have seen in the row crop markets.
With Wagner Group in the news again, what it means for the war in Ukraine is uncertain, however it removes an obstacle for Putin in terms of his overall grip on power. While the ag market took this news in its stride, it does highlight the enormous risk that the Black Sea is experiencing and the incredibly complex dynamic it has created.
Next week
Conversely, when it comes to bulk imports such as fertiliser the cost of freight is likely to drastically fall. This may provide some cushion should we see any supply driven rises in fertiliser price
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Harvest pressure drowns out all the other noise
If we assume, that this plan does go ahead, and Ukrainian grain once again has a ‘reliable’ channel through which to export its grain this could strip away any risk premium that has been built into the market. While major exporter stocks are tighter year on year, the freeing up of Ukrainian grain would have an immediate impact on global food prices.
The Egyptian Grain Authority (GASC) announced a tender over the weekend for 300kmt of wheat. After all 30 offers were considered, a relatively paltry 60kmt was ordered from Romania at US$256/t FOB. Russian bids remained firm at US$270/t (their official floor) which the Egyptians politely declined. GASC has previously stated they were unhappy that the competitive nature of sourcing grain had been lessened with Ukraine’s annexation from the Black Sea.
A good spring in Russia has seen SovEcon raise Russian production from 87mmt to 92mmt with the Northern/Central Spring wheat crops better than expected. This will again place Russia as the #1 wheat exporter in the 23/24 season and the likely price setter for some time to come. By setting an artificial floor price and kicking out the multinationals, Russia is effectively setting up a single-desk wheat export policy, whereby if you want their grain, you have to pay their price.
The US Profarmer tour is being run with participants finding corn and bean yields close to expectations. Current findings have yields slightly above the 5-year average at 175 bushels/acre for corn (vs the 5-year average of 173 bushels/acre) and 50.9 bushes/acre (50.0) for beans. It justifies the dip we have seen in the row crop markets.
With Wagner Group in the news again, what it means for the war in Ukraine is uncertain, however it removes an obstacle for Putin in terms of his overall grip on power. While the ag market took this news in its stride, it does highlight the enormous risk that the Black Sea is experiencing and the incredibly complex dynamic it has created.
Next week
Conversely, when it comes to bulk imports such as fertiliser the cost of freight is likely to drastically fall. This may provide some cushion should we see any supply driven rises in fertiliser price
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Data sources: Reuters, SovEcon, Dartboard Commodities, Next Level Grain Marketing, Mecardo
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Time to cut the BOM some slack
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
Moving in the right direction
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.