Andrey Sizov
28.06.2022
This is what has happened around the Black Sea during the last week:
* Crop conditions have somewhat improved for the Ukrainian corn crop, good precipitation of 20-40 mm in northern and central regions. However, the moisture deficit remains substantial and the weather is still hotter than needed
* SovEcon cut Ukrainian wheat crop estimate by 1.4 mmt to 20.7 mmt on a smaller area, corn upped by 1.1 mmt to 28.1 mmt on higher yield thanks to better ag inputs availability
* Russian South got some rains but winter wheat is struggling on a lack of precipitation in recent weeks
* Starting winter barley yield in Ukraine is very low – 2.1 mt/ha (-43% YOY), wheat – 1.8 mt/ha (-32%) but that’s mainly Odesa which suffered badly from lack of precip
* Russian Kuban winter barley yield is record-high – 7.4 mt/ha (+19% YOY). Could this be an indicator of good wheat yields as well? Probably yes, but contrary to barley it suffered noticeably during recent weeks. Kuban is #2 RU wheat grower
* Ukrainian terminals remain blocked, in June monthly grain exports are to be around 1.2 mmt again. Ukrainian market is to face huge oversupply amid record-high carry-in, not-so-bad crop and painfully slow exports
* Russian June #wheat exports are estimated at 1.1 mmt. How big exports would be in July and August – that’s the key question at the moment. On average Russia exports around 2.6 mmt in July, not sure if we can reach this number
* Heavy fighting continues in Donbas where Kremlin now seems to have a substantial advantage amid heavy artillery support. Ukraine: “Russia shots 10 shells against one Ukrainian”. Kyiv is pulling out some troops due to the growing risk of encirclement. Heavy western artillery is arriving in Ukraine.
* President Zelensky to G7: we need to end the war by the end of 2022. Winter seeding starts in the South in August-September
* Russia considers changing its export taxes calculation approach…the duty-free threshold price could be upped noticeably resulting in substantially lower actual taxes
* Black Sea news = bearish #wheat, good Russian crop is to hit the market shortly but we need to see confirmation of fast exports
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