Andrey Sizov
30.05.2022
* No signs of de-escalation in the region. Russia advanced in eastern Ukraine, close to full control of Luhansk, and could encircle a large group of Ukrainian troops
* Ukraine hopes to get long-distance rocket systems from the US; however Biden says that it won’t supply “Rocket systems that can reach Russia”
* After a pause (and a sell-off in #wheat) the market started to realize the reopening of the blocked Ukrainian terminals is not on cards. We still don’t see a reason why the Kremlin could do that unless there get something in return…and now they feel that they have that leverage
* Russian #wheat exports sped up closer to the end of May, could be around 1 mmt, down from 2.2 mmt a month ago
* Ukraine exported around 1.1 mmt of grain in May, an extremely low number
* SovEcon upped Ukrainian corn crop forecast by 1.2 mmt to 27.0 mmt, wheat – down by 0.9 mmt to 22.2 mmt. This mainly reflects a change in the area. We estimate corn area at 4.6 mln ha (+0.2 mln ha), 4.4 mln ha seeded already, USDA said 3.5 mln ha (!!) (harvested)
* A record grain carry-out in Ukraine + not so bad 2022 crop -> total supply is expected to exceed domestic consumption 3+ times
* If Ukrainian terminals remain blocked the pressure on the domestic prices will be enormous in 22/23->addtional risks for 2023 winter wheat seeding on top of the current war
* Spring seeding in Russia started to lag substantially…10.0 mln ha of #wheat planted, this -10% YOY, while it was ahead of the last year in the first half of May. Probably it’s the cold weather but perhaps farmers in some regions are cutting wheat area reacting to strict export taxes
* Based on weekly Ukrainian market note and Russian market note
