The grain market remains turbulent. Trade's attention is shifting back to the Black Sea region. Russia has pretty effectively shut down Ukrainian exports. First by blowing up the grain deal and then launching attacks on Ukrainian ports. However, that tactic is now boomeranging back to the Kremlin. The USDA released an update on the state of crops in the US yesterday.
The September wheat contract on the Matif closed yesterday €6 higher at €241,25 per tonne. On the CBoT, wheat rose 3,6% to $6.57½ per bushel. Corn took a small step back last trading session, gaining 0,4% to close at $4.82¼ per bushel. For soy, the loss was greater and the price fell 2% to $14.14½ per bushel.
The unrest in the Black Sea region is once again gaining the upper hand on the wheat market. Russia began and has carried out a series of attacks on Ukrainian port facilities in recent weeks. Last week, Ukraine managed to seriously damage a Russian oil tanker off the port of Novorossiysk with a naval drone. In short, both countries have turned each other's civilian logistics into military objectives. Russia's tactic to cripple Ukraine's grain exports is now blowing up in its own face.
Tens of thousands of dollars extra
Major international shipowners were already cautious about sending ships to the Black Sea and the booming Russian exports were largely driven by older ships from Turkey and China. However, insurers are not eager to insure these ships. Various sources from the insurance world report to Reuters that a substantial risk premium is placed on top of the normal premium. Ships bound for Russia pay an additional $10.000 or more per day compared to similar routes to Bulgaria or Romania. To be clear, that $10.000 for insurance is on top of the normal premium. Another more hidden problem is the fuel supply of these ships. Non-Russian shipping companies fear they will violate Western sanctions if they bunker in a Russian port. The Black Sea plays a crucial role in grain exports not only for Ukraine. Russia exports about 70% of its grain through the Black Sea and the Sea of Azov.
Corn and soy benefit from rain
The US Department of Agriculture released the weekly Crop Progress report last evening Dutch time. Rain in the cornbelt is now also cautiously reflected in the USDA figures. Of the corn acreage in the US, 57% now receives the status of good or excellent, compared to 55% last week. Last year this week, 58% of the corn area received a good or excellent rating. The condition of soy has also improved this week. 54% of the area is in good or excellent condition according to the USDA. That was 52% last week.
The winter wheat harvest is well over in the US with 87% threshed. This brings the progress of the harvest close to the five-year average, which stands at 88% for this week. Last week's rain missed the US summer wheat region. The level of spring wheat has therefore deteriorated slightly compared to last week. Of the acreage in the six most important states, 41% is rated good or excellent compared to 42% last week. The USDA has made minor changes to spring barley, but the proportion of good or excellent remains the same at 50% good or excellent.