The Russian foreign minister has been asserting again that the Grain Corridor flow is not helping the poorest countries. He also said that the lack of the fulfillment of the deal was “outrageous”. Russian representatives of the Joint Coordination Centre have reportedly stopped inspecting inbound vessels. There are reports that the European Commission is considering allowing the Russian Agricultural Bank to set up a subsidiary to reconnect to SWIFT to handle payments related to grain exports if the deal is extended.

The Russian Grain Union estimates 2022-23 total grain exports at 58-59Mt, compared to 38Mt exported the previous year.

According to Ukraine’s Ag. Ministry, as at 29 Jun, 2023-24 winter barley harvest was 6pc complete, with average yields estimated at 3.4t/ha, wheat and rapeseed harvests were less than 1pc complete.

The European Commission cut the EU common wheat production forecast by 2.7Mt, to 128.9Mt (125.7Mt previous year), durum by 0.2Mt, to 7.2Mt (7.1Mt), barley by 2.4Mt, to 49.7Mt (51.5Mt), maize by 0.4Mt, to 63.7Mt (52.1Mt), rapeseed by 0.3Mt, to 19.9Mt (19.5Mt). Sunflowerseed production was forecast higher by 0.2Mt, to 10.8Mt (9.2Mt).

Stratégie Grains cut its 2023-24 rapeseed production forecast by 0.6Mt, to 19.8Mt (19.4Mt previous year) reflecting persistent dry weather in northern regions and sunflowerseed by 0.4Mt to 10.9Mt (9.2Mt).

The Alberta Crop Report for the week ending 27 June noted that scattered rains were recorded across the province, with widespread thunderstorms. While the precipitation was mostly termed beneficial for crops, flooding concerns were noted in parts of the North West region, while moisture levels remained sub-optimal in some dry areas of the South, Central and Peace regions. Spring wheat condition rated at 45pc good/excellent (51pc week ago, 82pc year ago), barley at 40pc (46pc week ago, 76pc year ago) and canola at 43pc (49pc, 71pc). Rainfall during June has improved soil moisture levels in all regions. 

A group of South Korean flour mills reportedly purchased around 50,000 tonnes of US milling wheat, including SW (9.5-11pc protein) at US$255.61/t fob, HRW (11.5pc) at $309.36/t fob and DNS (14pc) at $322.36/t fob, Sep shipment.

Australia

Local markets’ lack of enthusiasm perhaps was attributable to the continued rainfall, coupled with a volatile US stocks and acreage report. Not really sure what the function of the US futures markets are on local values today – Russia continues to be the yardstick for value and Australian currency moves are followed more closely than Soft Red Winter wheat price. Delivered Darling Downs current crop did find some selling over the day with the much-anticipated start of the new financial year. Some rains overnight will help the buyers, with 15mm recorded across the southern Downs. The southern market was a little more opaque. Feed grain markets showed moderate signs of weakness but with little enthusiasm. Since the beginning of May Victoria is running around 150pc of normal rainfall – but the El Niño risk remains and the weather effect on crop outcomes, as we know, it’s all about the spring season. 

Canola was one of the beneficiaries from the acreage adjustment in the USDA report. Local values took a kick with 2023-24 Melbourne grower bids poking their heads above $700/t. Matif canola went home circa AUD$765/t, so basis remains historically wide. However, when considering how wide we have traded for the last 2 seasons it feels like good value. Once again, El Niño is sitting in the corner of the room, not saying anything. Yet!

The RBA is due to hold its July meeting later today with economists split over whether there will be a 25-point rise today or a pause, with most agreeing that there will be one more rate rise but will it be today or in August.