International grain and oilseed futures were mostly higher overnight. Chicago wheat, corn and soybean futures all seeing many months with double digit gains. Kansas HRWW futures were the standout, closing just under the session high of 769.5c/bu.
Better futures dragged the US Pacific Northwest FOB offers higher. Hard red winter wheat conversions for the PNW sees a day to day gain of over AUD$15.00 per tonne. This moves H2 grower bids here back to roughly $9.00 below US HRWW C&F Asia, great news for the Asian consumer.
It’s all about the Black Sea. Russia firmly rejecting any suggestion for a ceasefire by Ukraine when it comes to attacks on civilian vessels and non military port infrastructure.
The punters seem to be taking a longer term view on the Black Sea issue, adding tonnage to their net short position.
Sounds a little counterintuitive, but longer term these export delays out of Russia and Ukraine are simply building carry over stocks. This rally is being built around politics on a day to day basis, and the assumption that an extended delay in the arrival of freshly harvested Ukraine and Russian wheat onto the international market will push buyers back to US product. Fundamentally it may just be swapping the name of the carrier of the ending stocks from the US back to someone like Russia. In the meantime we have no additional demand. The world stocks to use ratio is still indicating that long term supply is comfortable.
It does mean that those that do “need” to buy some wheat, may find they have to pay a bit more. This is likely to result in smaller, more regular, import tenders or purchases, as the consumer waits out the Black Sea supply problem and the availability of cheaper wheat and lower freight and insurance costs.
The million dollar question is, how long will this take. The fact that Ukraine started hitting civilian vessels first and is now calling for a ceasefire might sound a bit rich, considering Russia started this war. I can’t help but think that Ukraine will be left with very minimal Black Sea export capabilities by the end of it. There were also reports that Danube river facilities had been targeted by Russian drones in recent attacks. Will the EU open the back door for Ukraine, at a price.