WEEKLY ROUND-UP OF BLACK SEA EVENTS – AUGUST 29

Andrey Sizov 29.08.2022

Ukraine has started a counter-offensive in the Kherson region…both parties have been preparing for it for months so it’s hard to expect any meaningful results soon
Will the grain deal hold? The #wheat market is not sure, December CBOT +4% on Monday
We believe that the grain corridor will continue to work at least short-term unless there is a major war course change. Black Sea premiums are likely to rise though as the market has been reminded of how fragile the situation is
Ukraine has shipped 1 MMT of foodstuff from Odesa terminals, total official grain exports will be around 2 MMT. 1.2 MMT #corn and 0.6 MMT #wheat have been shipped during Aug 1 – 29 – UA Customs
Russian wheat exports are still amazingly low for a such crop…3.5 MMT of wheat will be done in August, almost -36% YOY (!)
BUT things could change. The domestic market in Russia is sharply down, export tax down, FOB down, probably weaker ruble closer to 2022 end…Russian #wheat is becoming cheap (at last!), and should see good demand shortly. At the same time, we are not sure if there is a big downside…so don’t get carried away if you want to be bearish
Despite substantially bigger Russian #wheat crop estimate (94.7 MMT; + 3.8 MMT to August forecast) we left 22/23 export forecast mostly unchanged – 43.1 MMT (+0.2 MM) as the pace at the beginning of the season has been extremely low
Last week we suggested that being short wheat was not a good idea…this recommendation stands. Escalation in the Kherson oblast increases the uncertainty for the global grains market and this could help bulls first of all
Based on sizov.report on the Black Sea