Black Sea grain export corridor: 'Russia will continue to slow-walk inspections'

In this episode of Feed Matters, we asked Arlan Suderman, chief commodities economist, StoneX, for his perspective on the Black Sea conflict and what it means for global corn, wheat and oilseeds markets. 

One reason Russia probably agreed to the renewal of the Black Sea grain export corridor is that it has more control over what leaves Ukraine with the agreement than if there was no deal, he said.

"The other reason Putin extended the agreement is that he wanted to support his good friend Erdoğan in Turkey in the run off election.

"China of course has been putting pressure on Russia to continue [with the export corridor agreement] because it gets grain from Ukraine. But I think Putin is really running out of patience because Ukraine selling grain undercuts the price of Russian grain and also provides Ukraine with revenue it needs in its battle against Russian troops. So it doesn't serve Putin's best interests for Ukraine to be exporting.

"As long as Russia has the agreement requiring that ships be inspected by Russian inspectors, it gives it some control to slow-walk those inspections and to limit what goes in and out of Ukraine."

Brazil and US corn exports

Suderman anticipates that the war will not end any time soon. As such, there will be continuing reliance on Brazilian and US, followed by Argentinian and South African, markets for corn. Upon the conflict ending, it will take Ukraine many years to build up its corn market export dominance, he believes. 

"Unfortunately, the Ukraine-Russian war is far from over. NATO and the US have made it clear that they are commited to not allowing Ukraine to lose and China is commited to not allowing Russia to lose. It is going to be a war that just continues to go on and on. And each year that it goes on, it is going to decrease the amount of corn that comes out of Ukraine," said the analyst.

Wheat market ​

He also outlined the impact of Russia being a major producer of wheat, and how it got there.

"Russia sets the world price for wheat. Right now, it has a lot of wheat to dump on the world market, and it is doing so."

Soybean story 

The agri-commodities specialist also gave us a deep dive on the prospects for the US soybean complex and the likely impact of expanded soy crushing capacity in that market on the back of growing demand for renewable diesel and sustainable aviation fuel feedstocks.