Black Sea

Wheat Continues Higher But Fails to Lift Corn and Beans: Cattle Score Strong Technical Close

Tue, 19 Nov 2024 20:43:14 GMT

Grain and livestock markets both ended mixed Tuesday.

Matt Bennett, AgMarket.Net, says wheat was up for a third day continuing to see short covering by managed money traders and adding war premium.

He says the market has been immune to the conflict in the Black Sea but tensions have escalated to the point the trade is taking note.

Corn could not follow wheat with lower soybeans and the failure to get above chart resistance on the December contract just under $4.35.

Bennett says the factors holding the corn market back from seeing a more significant rally include the bearish fundamentals in the soybean market and the 1.95 billion bushel carryout.

He says what’s been interesting is funds have added to their long positions in corn buying around 100,000 positions, cash basis levels have been strong and there has been bull spreading tied to solid demand.

“There is still that tight fisted mindset among farmers that is evident in spreads and basis,” he adds.

Soybeans set back Tuesday on lower product values, forecasted rains in key growing areas of Brazil and a larger crops estimate with Abiove at a record 167.7 mmt.

“They continue to plant more soybeans and its something that’s probably not going to stop any time soon,” he says.

Bennett says even with some dryness in Argentina the soybean market faces a headwind with big global supplies from South America on top of the 470 million bushel carryout in the U.S.

Live and feeder cattle futures had a strong technical day closing back above key moving averages.

Feeders are still the leaders on strong demand and cash feeder prices plus the cash index climbed $1.27 to $252.31.

However, Bennett is still cautious and suggests risk management.

“The thing that concerns me is funds have been long forever and we’re not expecting a bullish Cattle on Feed Report this week with placement estimates around 104%,” he says.

There are also question about whether or not the moisture in the Southern Plains is causing some heifer retention or herd expansion.

Moscow Halts Grain Deal After Bridge to Crimea Struck

Mon, 17 Jul 2023 15:36:18 GMT

Russia halted participation on Monday in the year-old U.N.-brokered deal that lets Ukraine export grain through the Black Sea, just hours after a blast knocked out Russia’s bridge to Crimea in what Moscow called a strike by Ukrainian sea drones.

Russia said two civilians were killed and their daughter wounded in what Moscow cast as a terrorist attack on the road bridge, a major artery for Russian troops fighting in Ukraine.

The Kremlin said there was no link between the attack and its decision to suspend the grain deal, over what it called a failure to meet its demands to implement a parallel agreement easing rules for its own food and fertilizer exports.

“In fact, the Black Sea agreements ceased to be valid today,” Kremlin spokesman Dmitry Peskov told reporters on a conference call. “Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated.”

Turkish President Tayyip Erdogan, the grain deal’s sponsor, said he still believed Putin wanted it to continue. The Russian and Turkish foreign ministers would talk later on Monday, he told reporters.

“I hope that with this discussion, we can make some progress and continue on our way without a pause,” Erdogan said.

Russia’s foreign ministry said it would consider rejoining the grain deal if it saw “concrete results” on its demands.

The blast on the road bridge to Crimea could have a direct impact on Moscow’s ability to supply its troops in southern Ukraine, and reveals the vulnerability of Russia’s own Black Sea infrastructure to devices such as seaborne drones: small, fast remote-controlled boats packed with explosives.

Images showed a section of the road bridge had come down and traffic was halted in both directions, although a parallel railway bridge was still operational. Blasts were reported before dawn on the 19-km (12-mile) bridge, which Russian President Vladimir Putin ordered built after seizing and annexing the peninsula from Ukraine in 2014.

Kyiv gave no official account of the blasts but Ukrainian media quoted unidentified officials as saying Ukraine’s Security Service was behind it. Ukraine has long maintained that the bridge was built illegally, and its use by Russia for military supplies makes it a legitimate target. It was last hit by a massive explosion and fire in October.

Russia’s suspension of the Black Sea grain deal could drive up food prices across the globe, especially in the poorest countries. Ukraine and Russia are both among the world’s biggest exporters of grain and other foodstuffs.

The grain deal was hailed as preventing a global food emergency when it was brokered by the United Nations and Turkey last year, halting a de facto blockade of Ukrainian ports by Russia, which agreed to let ships pass after inspections in Turkey.

Global commodity food prices rose on Monday, though the increase was limited, suggesting traders did not yet anticipate a severe supply crisis. The Chicago Board of Trade’s most active wheat Wv1 contract was up 3.0% at $6.81-3/4 a bushel at 1056 GMT after earlier rising over 4%.

Putin had threatened last week to walk out of the grain deal, while also saying Russia could return to it if its demands were met.

“We can suspend our participation in the deal, and if everyone once again says that all the promises made to us will be fulfilled, then let them fulfil this promise. We will immediately rejoin this deal,” Putin said last week.

Western countries say Russia is trying to use its leverage over the grain deal to weaken financial sanctions, which do not apply to Russia’s agricultural exports.

European Commission President Ursula von der Leyen described Russia’s suspension of the agreement as a “cynical move” and said the EU would continue to try to secure food for poor countries.

WITHOUT RUSSIA?

Russia has agreed three times in the past year to extend the Black Sea deal, despite repeatedly threatening to walk out. It suspended participation after an attack on its fleet by seaborne Ukrainian drones in October, leading to a few days when Ukraine, Turkey and the United Nations kept exports going under the deal without Moscow.

Denys Marchuk, deputy head of the Ukrainian Agrarian Council, the main agribusiness organisation in Ukraine, said seaborne exports could proceed again without Russian agreement.

“If there will be safety guarantees from our partners, then why not conduct the grain initiative without Russia’s participation?” he told Reuters.

Any such resumption of Ukrainian sea exports without Russia’s blessing would probably depend on insurers. Industry sources told Reuters they were studying whether to freeze their coverage.

“Some underwriters will look to take advantage with a hefty increase in rates. Others will stop offering cover. The (key) question is whether Russia mines the area which would effectively cease any form of cover being offered,” one insurance industry source said.

The latest blast on Russia’s bridge to Crimea follows months of Ukrainian strikes on Russian supply lines as Kyiv pursues a counteroffensive to drive Russian forces out of its territory.

Unverified imagery showed a section of road on the bridge had split and was listing to one side, with metal barriers buckled. Dash cam footage showed drivers braking sharply shortly after the incident.

Russian officials said a Russian Su-25 fighter-bomber crashed into the Sea of Azov on Monday, but the pilot ejected successfully and there was no indication of an attack. The bridge to Crimea spans the mouth of the sea.

The Ukrainian counteroffensive, which began last month, has so far been slow going, capturing a string of small hamlets in the south and some territory around Bakhmut, the small eastern city Russia captured in May after the war’s deadliest combat. Kyiv said on Monday its forces had captured another 18 sq km of territory over the past week, bringing the total captured to more than 210 sq km.

(Reporting by Lidia Kelly in Melbourne, Guy Faulconbridge in Moscow, Max Hunder in Kyiv and Reuters bureau; Writing by Peter Graff; Editing by Philippa Fletcher)

Is Russia Taking a Page Out of China's Playbook By Working to Take Control of Its Grain Industry?

Tue, 11 Apr 2023 17:54:21 GMT

Three major grain companies have announced plans to stop exporting Russian grain as of July 1, as analysts say the move is spurred by Russia’s plans to control its domestic grain industry. Russia claims the decision will not affect the volume of domestic grain shipments out of the country, but analysts argue the decision will put Russian grain farmers at a disadvantage.

Cargill, Viterra and Louis Dreyfus Company all recently made announcements. Each company says it will stop exporting Russian grain at the beginning of the 2023-2024 marketing year, which starts July 1.

“The cessation of its export activities on the Russian market will not affect the volume of domestic grain shipments abroad. The company’s [Cargill’s] grain export assets will continue to operate regardless of who manages them,” the Russian ag ministry told Reuters.

Louis Dreyfus Company made the announcement last week, and said that it is withdrawing from Russia “as grain export challenges continue to increase in the country.”

Increased Challenges for Farming in Ukraine

Dan Basse of AgResource Company was meeting with Russian, Ukrainian and Baltic traders when the news about Louis Dreyfus was released last week.

“We all talked about the risks and the opportunities of the markets, and the Ukrainians are struggling mightily, as you can imagine. They can’t find fertilizer, seed supplies are several years old, the price of diesel is now up to $34 a gallon. Imagine farming with that,” Basse says.

Long-Term Challenges for Russia

He says based on his conversations, as well as AgResource data, he thinks the Ukrainian crop export program will be well below last year. But it’s not just farmers in Ukraine that could be negatively impacted by the war. He thinks Russia will face growing challenges longer-term with not just exports, but crop production.

“If you think about what the Russians just did, in taking care of the control of the grain industry, that’s fine in terms of buying from the farmer and elevating it on a boat, but it’s the Russian farmer that will be the big loser,” says Basse. “We still believe they’ll be able to get some technology from Syngenta and maybe Bayer and some others on the seed side. But longer term, I think there’s going to be a drag in production out of the Black Sea in general, including Russia and Ukraine.”

Basse thinks down the road, the changing scenario for grain production in the Black Sea region could be a “bullish tailwind.”

“What we don’t know about today, though, is will President Putin actually allow the grain corridor to continue after the middle of May, now that he gave us a 60-day extension? The Russian grain traders were more pessimistic on this one. We’ll see how that all comes forward, but that would be really important as we head into the end of April and middle of May,” he says.

The Murky Future of the Black Sea Grain Initiative

Just last week, Russia’s Foreign Minister put the onus of the Black Sea Grain Initiative’s future on the West. Russia claims the West’s sanctions on Russian food and fertilizer exports are creating insurance and payment hindrances. Russian leaders say if those sanctions aren’t removed, then Ukraine will have to use land and river routes to export grain in the future instead of traveling across the Black Sea.

As more grain companies announce plans to exit Russia and halt grain exports, Chip Nellinger of Blue Reef Agri-Marketing says Russia’s efforts to control its grain export program is a similar move to China.

“It seems like Russia has taken a page out of the Chinese playbook as far as the transparency goes, and rightfully so,” says Nellinger. “They’ve always played it close to the vest. It’s hard to get actual numbers out of there. Are they going to export? Are they going to ban exports? Are they going to create some sort of domestic stockpile? They’re playing that game, and we don’t know for sure what the end result will be.”