Waiting for Next Black Sea deal

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The Black Sea export corridor deal is also coming up for renewal again, the initiative facilitated by the UN and Turkey, which allows the safe navigation of grain, related foodstuffs, and fertiliser from three Ukrainian ports (Odesa, Chernomorsk and Yuzhny). The last renewal took place on 19 November 2022 for 120 days, bringing the date for renewal to around 19 March. We have already seen some reaction in prices to the concerns surrounding whether this deal will be renewed.

Ukrainian officials point to the ‘destructive’ actions from Russia, by intentionally slowing or stopping inspections, asking for unregulated documentation as well as increasing uncontrolled traffic volume through the Azov and Black Sea ports. This is creating a queue of vessels in the Bosporus.

Russia has said it would be ‘inappropriate’ to extend the deal unless the sanctions are lifted on agricultural exports from Russia, as well as resolving other issues, due to blocks on payments, insurance and logistics impacting grain and fertiliser exports specifically. This is significant for Russia considering its large wheat crop this season, pegged at around 90-105Mt by varying consultancies/agencies.

As a result of this, AHDB report that there will almost certainly be some volatility in global wheat markets in the coming weeks, as we move closer to the date of the Black Sea export corridor renewal and information emerges on the expected escalation of the war. News on whether this deal will be renewed and for how long will be key to global availability.

Supply and demand remains tight

Global grain supply and demand remain tight, and we have seen wheat prices supported despite coming back from the highs seen back in May. Should the deal be extended, and we see Ukrainian grain continue to flow, and Russia continue their aggressive export campaign, any risk and support built in prices in the run up to the renewal could come back. On the maize picture too, the floor to the grain market, Argentinian dryness concerns continue but that Brazilian crop is large and when it arrives could pressure prices. Looking ahead, as we head rapidly towards next season, new-crop conditions will be increasingly in focus.

AHDB report  that UK feed wheat futures followed the upward price movement seen in global wheat futures last week. The May-23 contract gained 2.8% (£6.65/t) Friday – Friday, and new crop futures (Nov-23) climbed 3.3% (£7.60/t) over the same period.

Feed wheat delivered into East Anglia (Feb-23 delivery) was quoted at £236.50/t on Thursday, up £6.00/t over the week. Bread wheat delivered into the North West (Feb-23 delivery) was quoted at £316.50/t on Thursday, up £5.50/t over the same period.

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