Market report: Volatility in Black Sea but good start for Australia

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The US market has traded up around 1$/t in a volatile week driven by events relating to the Black Sea export corridor, declining US winter wheat ratings but there is a more favourable US weather outlook.

The US winter wheat crop ratings  were unchanged week on week with 27% of the crop remaining in the good/excellent category, but the percentage deemed poor, or very poor increased by 2 points week on week to 39%.

Meanwhile Russian officials say the Black Sea grain deal may be over, with no point talking about any extension while Western sanctions are still in place. Ukraine’s infrastructure Ministry says crop shipment inspections remain delayed, with Russia rejecting inspection plans, and seeking to enforce its own schedule.

Ukraine’s grain exports have fallen 13% year on year to 39.2m tonnes on account to April 12th, including 13.5m tonnes of wheat, 23.0m tonnes of corn, and 2.3m tonnes of barley. Ukraine’s Ag Ministry reported that the 2023 grain harvest could reach 50m tonnes if the weather remained favourable, an upbeat outlook, as previous official estimates placed the crop at around 44.3m tonnes.

Russia’s Ag Ministry forecasts the country will harvest 123m tonnes of grain in 2023, down from a record 154m tonnes in 2022, including 78m tonnes of wheat compared with over 100m tonnes in 2022. One of the major global grain giants commented, that Russia’s increased control of its own exports threatens to obscure prices and curb export efficiencies in the global grain markets.

Good start for Australia

In the southern hemisphere, rain over the last 3-4 weeks have set up the 2023/24 season to be one of the best starts in a long time for Australian wheat, as the ground has good moisture following heavy rains last year. Brazilian farmers have started to sow wheat for the 2023/24 season, with acreage expected to expand on the expectations of costs remaining stable, and strong domestic and international demand.

The EU has questioned the move by Poland and Hungary to ban imports of grain from Ukraine, saying ‘unilateral actions’ were unacceptable and a ‘potential breach of the EU’s trade policy’. Poland will allow the ‘transit’ of Ukrainian grain through the country from tomorrow, although it will keep its ban on imports of Ukrainian grain, and other food products for its own domestic market.

ADM has pointed out that EU soft wheat production for 2023/24 is now seen at 128.9M tonnes, down from 129.5m tonnes previously as reported by Strategie Grains, citing crop ratings had deteriorated in Spain because of dry weather for the reduction. EU soft-wheat exports had reached 24.4m tonnes as of 16 April, up 8.5% from a year earlier. Morocco, Algeria, and Nigeria remain the top destinations. UK prices have traded up just over £5/t week on wheat, although declining domestic and export demand would deem the rise as a ‘selling opportunity’ to UK growers.

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