Weekly round-up of Black Sea grain market – July 4

Russian wheat tax down $62; SovEcon upped 22/23 Russian wheat export estimate

This is what has happened around the Black Sea during the last week

* Russia lowered the export tax, ie next week’s wheat tax will be “only” 4,600 rub/mt ($84/mt) vs $146/mt. It will get even lower soon, farmers are excited BUT FOB is also collapsing ~ $375, around -10% in two weeks…and it needs to go lower to make RU more wheat competitive

* Russian early July exports are expected to be weak, that’s OK..but if they don’t speed up substantially by early August it is going to be a problem. Our basic scenario is they will – SovEcon upped Russian 22/23 export by 0.3 mmt to 42.6 mmt. The pace of exports during the next few months is likely to be a key variable for the global wheat market

* GASC bought a record-high 815K of wheat…no idea why so much, especially for October where there were no Russian offers and they bought 240K of French wheat. Total French sales were 360K…quite aggressive for the beginning of the season. Probably it was a good deal for sellers, not Egypt

* Huge sell-off in wheat / corn (macros, Ru crop & taxes, funds going short wheat and getting rid of corn(?)) – we are back to February levels. Wheat price dynamics – more or less in line with our expectations. The market asks for a bounce short term, some downside left but this sell-off could be approaching the bottom – we are becoming less bearish

* Good rain in northern Ukraine (good for #corn), Russian Siberia and Volga Valley (good for #wheat), Russian South (not good for wheat at this stage, quality could suffer)

* Starting Ukrainian #barley and #wheat yields substantially below average – 2.4 mt/ha and 1.8 mt/ha but gradually increasing as farmers start to harvest better fields

* Russian #wheat yield is not that impressive 2.7 mt/ha vs 2.4 mt/ha a year ago, mainly Stavropol region (#3 Russian wheat grower)…should improve substantially shortly when the campaign moves to Krasnodar region (#2)

* Ukrainian terminals remain blocked…Turkey continues its “grain corridors” diplomacy (anyone is still following it? not sure) but the basic scenario remains the same – ports will remain shut. Russian troops left strategic Snake Island not far from Odesa. Russia is advancing in Donbas – no end to the war in sight

* Ukraine exported 1.2 mmt of corn in June, marginally above May…prices are falling, getting close to $200/mt Polish border…were almost $50 higher in mid-May. 22/23 grains S&D will be a disaster for the domestic market – huge supply (record high carry-in + no so bad crop) vs limited exports. Total supply ~ 3X domestic consumption

Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

WEEKLY ROUND-UP OF BLACK SEA EVENTS – SEPTEMBER 19

Ukraine and Russian grain exports speed up; wheat sell-off on Monday could be a buying opportunity

WEEKLY ROUND-UP OF BLACK SEA EVENTS – AUGUST 29

Ukraine starts large offensive in Kherson; wheat rallies 4%+ on Monday

Weekly round-up of Black Sea grain market – August 22

Ukraine warns about heavy Russian shelling this week; Russian exported 0.9 mmt of wheat

Weekly round-up of Black Sea grain market – August 15

Ukraine shipped 16 vessels from Odesa; Russian August wheat export 29% below average

Weekly round-up of Black Sea grain market – August 8

Ukraine shipped 10 vessels from Odesa; Rosstat published key Russian wheat numbers

Weekly round-up of Black Sea grain market – August 1

First vessel with 26K of Ukrainian corn left Odesa; what will happen to Russian wheat prices?