No deal reached yet on Ukraine grain export corridor renewal

16-May-2023 - Last updated on 16-May-2023 at 13:54 GMT

Renewal of the UN brokered Black Sea grain export corridor remains a key watchpoint in markets, with it set to expire on Thursday this week, notes the AHDB.

After talks last week in Istanbul, another extension could be on the cards, according to a statement from Turkey’s defence ministry last Friday (Refinitiv).

However, a Ukraine foreign ministry official said that the country was receiving “quite conflicting” information on a potential renewal, and that they could not rule out the deal being discarded, after May 18, reported UK analysts, CRM Agri.

Grain markets remain volatile as a result.

The Black Sea grain initiative, aimed at ensuring the flow of grain, foodstuffs and fertilizer amid global shortages exacerbated by the war in Ukraine, has now allowed the safe export of more than 30 million tons, since it first began in July last year. That detail was stressed by the UN humanitarian affairs chief, Martin Griffiths, when he attended the meeting held on Thursday last week in Istanbul, to discuss the future of the initiative. The gathering included senior officials from the signatories to the deal, Russia, and Ukraine, together with the UN and Turkey, which mediated the agreement.

WASDE report

Much of the market focus, however, is on new season supply and demand (2023/24), with the latest USDA World Agricultural Supply & Demand Estimate (WASDE) report released last Friday, noted the AHDB team in an outlook.

For corn, the WASDE set out larger global supplies, increased global demand and higher global ending stocks next season, in line with market expectations.

World corn production is forecast to reach a record high, at 1,219.6Mt (+69Mt), with increases set for the US (+39Mt), EU (+11Mt), Argentina (+17Mt) and China (+3Mt), but smaller crops expected for Ukraine (-5Mt) and Brazil (-1Mt), year on year.

For wheat, the picture looks different, said the AHDB analysts. The US wheat production forecast is smaller than the market expected, at 45.2Mt.

“The 2023/24 global wheat outlook is one of lower supplies, trade, consumption and ending stocks. Despite a record global production forecast at 789.8Mt, a lower total carry in stock is forecast for the new season, down mostly to tighter stocks in India (-10Mt).

“Global wheat demand is expected to contract slightly, down to increased feed grain supplies, as well as reduced global wheat trade. Global ending stocks are forecast at 264.3Mt, which, if realised, would be the lowest since 2014/15 and with more than half forecast to be held in China.”

US soybean plantings

Looking to oilseed developments, and the US has been making progress with its soybean plantings. By May 8, 35% had been planted; at that rate, planting is ahead of last year and the five-year-average.

The first new crop (2023/24) estimates, as per the WASDE, confirmed that a record US soybean crop is expected in the new marketing year, pegging the crop at 122.7Mt, up 5% from last year. "This record crop means that US ending stocks are forecast to grow to 9.1Mt, the highest since 2019/20,” said the AHDB team.

Indeed, the USDA forecasts that global oilseed production will rise 43.8Mt to 671.2Mt, mainly on higher year-on-year soybean production in South America and the US.

Rapeseed production, year-on-year, is expected to grow in both the EU (+964Kt) and Canada (+1.3Mt). That growth will partly offset the lower output anticipated from Australia, with reduced yields forecast there.