Andrey Sizov
18.07.2022
This is what has happened around the Black Sea during the last week:
- Russian wheat exports are picking up…0.5 mmt done last week vs 0.3 mmt a week ago. Not really impressive taking into account a record-high crop. The pace should increase substantially further but we expect to see July exports slightly below average for the month (2.6 mmt)
- US & EU are tweaking their sanctions trying to assure vessels owners / banks / insurers that they won’t be sanctioned when dealing with Russian grain & ferts
- Volatility in USDRUB is crazy (-6% last week; +11% a week earlier) – this makes predicting a wheat tax which now takes into account USDRUB more challenging
- Russian FOB remains way too expensive….$20+ above Matift…either Matif should go higher or RU collapse. And they are booth substantially above SRW….this explains 1 mmt US weekly exports
- GASC holds another wheat tender…the EU and Russia, key suppliers, are not invited. Strange to say the least. GASC has a long history of playing different games with the market – typically it doesn’t end well for them. Could they buy SRW this time to “punish EU&RU”? SRW is rallying today 5-6%
- In a similar thread after the previous GASC tender we wrote ”GASC bought a record-high 815K of wheat…no idea why so much”
- SRW indeed looks not expensive….not the case for the EU and especially Russia
- Ukrainian exports remain modest despite the reopening of the Ukrainian Danube-Black Sea channel…0.6 mmt done in the first half of the month
- Progress in talks about “Ukrainian grain corridors” – lots of optimistic comments after the meeting in Turkey; after a pause the Russian Ministry of Defense (MOD) said “its proposals were mostly supported by other parties”
- The agreement could be signed this week – even if it happens will it lead to a substantial increase in Ukrainian grain exports? We still doubt that. Kremlin’s top officials for some reason lost interest in the topic – it was only MOD spokesman who commented on this
- Presidents Putin and Erdogan are meeting this week in Teheran, could talk about grain again
- Russian wheat yields remain high – 4.2 mt/ha (+24% YOY); Ukrainian – only 3 mt/ha (-29%)
- Domestic prices are tumbling in both countries on new crop arrival and extremely slow exports in the case of Ukraine. Ukrainian S&D will be a disaster for farmers if terminals remain blocked
