A Russian cargo ship was hit by drones while about 50ks off the Russian Black Sea port town of Novorossiysk. There are mixed reports of who owns this ship, some commentators claim Russia, some Turkey, some say it’s under a Cameroon flag. Most agree it was part of the Russian shadow fleet.

The attack is simply providing proof that there is little chance of the recent increase in attacks on merchants ships in the Black Sea reducing in the short term. Russian grain exports out of the Black Sea have been reduced significantly, roughly halved in the month of July. One might usually consider this very bullish news, but the world has become complacent, and the slowing of exports comes at a time when the northern hemisphere is harvesting and supply is not an issue. Both domestically and for the major importers.
The disruptions in Black Sea exports roll stocks forward into later months, possibly coming back online as Argentina and Australia fuel up the headers. It’s interesting from a grain markets perspective. The trade is likely buying cheap Russian wheat as it falls in value domestically. Our worse case scenario would be an end to both the Iran / Israel war, and the resumption of exports out of the Black Sea late this year / early next year. The trade would hate buying cheap Black Sea wheat in Q3-4, and then cheap Aussie wheat in Q1-2. The weather here might throw a spanner in that yarn.

The USDA has announced a further 750kt of soybean sales to unknown destinations. Combine this with the 1mt already confirmed for China and that’s a lot of beans being bought over the last couple of weeks. So what do soybean futures at Chicago do, well they fall naturally. Overnight nearby bean futures were down 13.75c/bu (AUD$7.17/t). Combine this with lower crude oil and it set up a session of profit taking across Paris rapeseed futures. the Feb contract shed €3.50/t. Combine this with a stronger AUD and we’ll likely see a slice of yesterdays increase in local canola bids handed back today.