The Black Sea region is again in the spotlight among grain traders. Ukraine's export figures give food for thought. In the meantime, Zelensky is doing his best to further stimulate exports. Russia has its sights set on Africa and is trying to gain influence there.
The grain market started the new week on a negative note across the board. At the time of writing (before the market closed), wheat was down approximately 1% on both the Matif and the CBoT. With soy, the loss was less significant and was limited to 0,1% lower. Corn is currently the biggest decliner and is 1,5% in the red.
Wheat is still in the corner where the blows fall. Low demand for wheat and stiff competition are cited by several analysts as the main causes for the subdued mood in wheat on the Matif. The Ukrainian export figures do not confirm the latter argument. Export figures published today by the Ukrainian Ministry of Agriculture show that 12,7 million tons of grain were exported. Last season the counter stood at 30 million tons on November 17,6. So far in the current season, 5,8 million tons of wheat, 5,9 million tons of corn and 870.000 tons of barley have been exported. For comparison: last season that was 6,7 million tons of wheat, 9,3 million tons of corn and 1,45 million tons of barley. So far this month, 3,45 million tons of grain have been exported compared to last November's exports of 4,35 million tons.
food security
The Ukrainian ministry has not commented on the figures, but trade and grower representatives cite the blockade of the Black Sea ports and Russian attacks on port facilities on the Danube as major culprits. To smooth transport across the Black Sea, Zelensky plans to sail in secured convoys. “I have agreements with several countries on strong convoys managed by Ukrainians but equipped with foreign rigging,” Zelensky said at a news conference in Kiev on Saturday. During the same meeting on food security, Zelensky did ask for additional anti-aircraft defenses to keep the new corridor safe.
What is also not helping to get grain exports going better is the weather. In the Odessa region, King Winter has struck with slippery roads and other obstacles to get grain from the farm to the port. Once the port has been reached, the journey cannot continue due to a storm on the Black Sea. Shipping traffic has been partly blocked as a result.
Power
Russia is strengthening ties with several African nations. Russia wants to produce 200.000 tons of grain before the end of the year, writes the Russian news agency Interfax. Putin is trying to strengthen his economic influence and power base with the grain deliveries and put the Western powers at a disadvantage. However, Russia's economic influence is only limited. In 2022, Russia traded approximately $18 billion with countries in Africa compared to $282 billion with China.
In the US, the White House has shelved ambitious plans to increase the mandatory blending percentage in gasoline. Eight states in the Midwest asked the EPA last year to increase the blending percentage from E10 to E15 to lower gasoline prices after high oil prices due to the war in Ukraine. According to the oil companies, this is counterproductive and disruptive to the market and according to Reuters sources, the White House has now given in to those objections. It is mainly corn that is used for the production of ethanol in the US.