Weekly round-up of Black Sea grain market - June 27

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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