Weekly round-up of Black Sea grain market – July 18

Russian July exports seem below average; grain corridors agreement could be signed this week

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

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