Wheat Exports From Black Sea Region Slowing Dramatically

February 17, 2012 12:08 AM

What Traders are Talking About:

* Black Sea wheat exports slowing. A story in the Ekonomicheskie Izvestia newspaper says Ukrainian grain traders have agreed to limit wheat exports to 1.7 MMT from February through July following a request from the government due to concerns with this year's crop. Earlier this week, Ukraine's ag minister said the government had no plans to restrict wheat exports. The agreed cap will limit total 2011-12 Ukrainian wheat exports to 4.8 MMT, half of what traders had originally planned to sell onto the world market. Meanwhile, Russian bids were absent from the Egyptian tenders for optional origin wheat yesterday and last weekend. Until recently, Russia (and to a lesser extent Ukraine) has dominated global wheat trade since last August.

The long and short of it: While there has been no "official" government action to slow exports, wheat sales out of the Black Sea region have dropped off considerably, opening the door for more U.S. wheat exports. And U.S. wheat prices are competitive again on the global market.

* Still waiting on final Chinese soy agreement total. The Chinese delegation that signed purchase agreements for 8.62 MMT of U.S. soybeans on Wednesday was expected to sign more deals yesterday in Los Angeles. While there's no reason to believe additional agreements weren't signed, I haven't been able to confirm yet this morning any specifics.

The long and short of it: Total tonnage of the purchase agreements signed by China is expected to be around 12 MMT, which would top last year's record of around 11.5 MMT.

* Macro focus remains on Greece. European Union finance ministers meet Sunday and Monday as they try to decide whether to award Greece 130 billion euros ($170 billion) in bailout funding needed by the country to avoid defaulting on sovereign debt obligations. A sticking point for some EU officials seems to be that Greece's debt:GDP ratio remains at 120%, but they are expected to approve the aid package.

The long and short of it: While hopes that Greece will be awarded its second bailout funding are improved from yesterday, there is still likely to be some investor trepidation ahead of the weekend.

* Markets, gov't offices closed Monday. Most markets, including grain and livestock markets, and government offices are closed Monday, Feb. 20, for Presidents' Day. Grain markets will resume trading with the overnight session on Monday evening.


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