Category Archives: Mark’s Minutes

Mixed close across global futures

Wheat futures traded either side on Tuesday with no further Russian attacks on Ukraine grain ports and storage.  No attacks, no bull markets, it is all about news headlines.

At the close Matif had slid on the front months while CBOT marginally gained across the board.

A Romanian merchant vessel is confirmed to have sustained some minor damage in the recent attacks on Danube ports.  While no action is likely to be taken, it could come up during today’s NATO/Ukraine council meeting regarding the Black Sea corridor.  Amid growing criticism, Putin defended scrapping the grain deal saying it “has lost its meaning”, however, a report uncovered yesterday showed Russia had always intended to slow the passage of ships before finally pulling out entirely.

Bulg/Rom 11.5 CFR SEA would be offered around USD310/mt for Aug/Sep shipment.

ASW1/ASW9 around $315-320 and APW1 $325/mt although it’s a market not clearly defined among so much uncertainty.

 

Wheat is taking profits this morning after multi-month highs yesterday, with action slowing a bit in the Black Sea region after Russia’s initial strike on the Danube on Monday.

Bangladesh issued an international tender for 50k tonnes of milling wheat, for Aug-Sept shipment, closing on August 13; they still have a tender out for the same amount closing on August 1.

Day one of the Wheat Quality Council’s Spring Tour found average hard red spring wheat yields in southern and east central North Dakota at 48.1 bushels per acre, down from 48.9 bpa last year but above the 40.2 bpa five-year avg.

The European Union yesterday said they’d be willing to export “almost all” of Ukraine’s grains via “solidarity lanes”, as well as help cover costs; that would consist of road and rail connections through Romania, Poland, and Hungary.  60% of Ukrainian grain exports went through those routes during the Black Sea deal, with the other 40% via water.  The E.U. Ag Commissioner said they could handle the entire four million tonnes per month shipped during the agreement.  Lithuanian officials asked the E.U. to develop a route for UKR grains through Baltic ports, five of which in multiple states can handle a combined export capacity of up to 25 MMT.

 

Mpls wheat -13

KC wheat -22

Chic wheat -20

Matif wheat -4

Canola -3

Soybeans -4

Soybean oil -74

Crude -92

Corn -7

CAD -36

 

Wheat sells off Friday under uncertainty leaving traders no option but to take some money off the table.

CBOT wheat futures lost nearly -30c on Friday night as market participants had to digest several headlines over the grain deal of which Russia said there were no new/alternative talks on while also saying they want the option to inspect any ships heading to Ukrainian ports.  Shipping data has shown forward traffic in the Black Sea has dropped by 35% so far following warnings from both Russia and Ukraine that any vessels calling ‘enemy’ ports would be treated as hostile.

Ukraine continues to export over land and through the Danube river ports as new crop deliveries ramp up.

Yields are currently running at 4.12t/ha which was well above the 3.15t/ha this time last year.

Zelensky on Friday told Ukraine’s top general to prepare a set of actions to continue the grain corridor and on Saturday spoke to NATO’s secretary general about continuing the corridor.

Russian 12.5 FOB levels remain around $240/mt ex Novo. End of the week there were new vessel fixtures from both Kavkaz

 

Wheat and corn prices exploded overnight in both Europe and the U.S., including Dec CBOT corn hitting its highest level in almost a month

Russian attacks expanded to the Danube River this morning, the key point in Ukraine’s campaign to replace the majority of its Black Sea exports via river and overland routes.

Strikes continued on the sea port of Odesa as well, but drone attacks on Danube grain terminals were a new and very specific target near the Romanian border, very clearly targeting Ukraine’s ability to export grains following the collapse of the Black Sea export agreement.

 

Mpls wheat +35

KC wheat +35

Chic wheat +40

Matif wheat +12

Canola +5

Rapeseed +17

Soybeans +20

Soybean oil +190

Crude +75

Corn +20

CAD +6

Wheat settles nearly unchanged yesterday despite increasing tensions

Wheat looked set for another double digits higher close overnight however settled close to unchanged despite tensions ratcheting up even further.

Ukraine in a tit for tat or quid pro quo response issued their own threat against any ships in the Black Sea calling Crimean or Russian ports which will be enforced from midnight tonight.

If insurers pull insurance like they have for any vessels calling Ukraine ports, this will be a blow to Russia’s own oil and wheat shipments.

The White House warned Russia is planning an attack on civilian vessels calling Ukraine ports by laying additional sea mines in the approach areas to Ukraine ports.

Overnight Russia stated they had no intention of targeting civilian vessels, describing the statements as “fabrication”.

Blah, blah, blah, cooler heads prevail this morning

 

Wheat futures are lower led by KC.  Canada and US HRS crop areas remain dry.  EU and Black Sea weather look mostly normal.

Russia continues to offer wheat for export below other exporters prices and $45 below French wheat.

There still remains talk that India my need to import wheat.

 

Grain volume was strong once again overnight, with gains brief and quickly wiped out as soybeans retreated from highs and December corn failed at the 100-day moving average.

Russia continued their attacks on grain terminals and infrastructure across Ukraine, despite officials holding out hope for a resumption of the Black Sea export deal.

U.S. corn and soybean crops are about to enter a rough stretch weather wise but there is some hope that more beneficial weather will return as we get into August.

Taiwan millers tendered for 108k tonnes of U.S. milling wheat this morning.

Officials at the Romanian port of Constanta said they have the capacity to handle more Ukrainian grain; they shipped 15.25 MMT of grain from Jan- June, up almost one quarter from last year, with UKR grain accounting for 7.5 MMT of that, compared to 8.6 MMT in the entirety of 2022.

Ukraine’s Ag Ministry reported the country’s 2023 grain harvest at 5.9 MMT thus far, including 2.25 MMT of barley and 3.4 MMT of wheat.

FranceAgriMer reported the French soft wheat harvest at 58% complete this week, up from 33% a year ago, with 80% rated g/ex, unchanged vs last week.

French consultancy Agritel yesterday raised their 2023 Ukraine wheat production estimate from 16.34 to 18.9 MMT, still below 20.7 MMT in 2022 and the lowest output level since 2012/13.

The International Grains Council yesterday raised their 2023/24 world corn production estimate by nine million metric tonnes, to 1.22 billion tonnnes; U.S. output was up from 373 to 384 MMT (still more than 5 MMT below the USDA).  World wheat output fell by 2 MMT this month to 784 MMT.

 

Mpls wheat -13

KC wheat -24

Chic wheat -22

Matif wheat -7

Canola -23

Rapeseed -19

Soybeans -11

Soybean oil -17

Crude +50

Corn -14

CAD -13

The move higher in Mpls continues to be a function dry weather forecasts for Canadian and US spring wheat areas as well as The Black Sea Corridor concerns

The last few days have shown both Russia and Ukraine trying to demonstrate they can exert control over the Black Sea with Russia attacking Snake Island and Odesa, and Ukraine counterattacking Sevastopol in Crimea.

Early harvest reports in Ukraine and Russia show a higher proportion of feed wheat likely which has seen protein spreads start to widen across CVB ports from €2-4/mt to €8/mt close of week.

 

Wheat prices are higher this morning led by Chicago on short covering.

The grains rallied out of the gates overnight as Russia followed through on their threat to withdraw from the Black Sea export deal.  Their rhetoric was fairly consistent ever since the most recent extension of the agreement, still looking for more aid for their own grain and fertilizer exports.

It remains to be seen if Ukraine can find a suitable workaround to replace much of that seaborne business

33 MMT of grains have been shipped under the pact thus far.

On the U.S. side, plenty of trade concerns remain over the state of 2023 row crops; condition ratings should improve again this afternoon but rains are starting to dry up a bit once again, with forecasts trending warmer and drier now up into the end of the month.

The calendar flipping to August will bring more concern for the state of the soybean crop as well, with basically any yield reductions off what is essentially a record forecast by the USDA resulting in further tightening of the 2023/24 balance sheet.

Bangladesh issued an international tender for 50k tonnes of milling wheat this morning, optional origin for Aug-Sept shipment; their last reported wheat tender came in September 2022.

China’s government reported a 1% decline in summer wheat production this season, to 134.53 MMT, the first decline in seven years due to heavy late rain; acreage increased slightly but yields were down 1.3% year over year.

 

Mpls wheat +13

KC wheat +16

Chic wheat +18

Matif wheat +3

Canola +6

Rapeseed+3

Soybeans +13

Soybean oil +80

Crude -74

Corn +4

CAD +2