Kristina Peterson reported in Saturday's Wall Street Journal that, "The U.S. on Friday stepped up its efforts to get Mexico to ease its restrictions on genetically modified corn, after more…
Black Sea Grain Deal Talks Continue; FAS Highlights Russian Grain and Oilseed Exports
Reuters writer Daren Butler reported yesterday that, “Turkish Foreign Minister Mevlut Cavusoglu said on Wednesday he thought the Ukraine Black Sea grain deal could be extended for at least two more months, as officials from the parties involved held the first day of talks on an extension in Istanbul.
“Russia has said it would not extend the pact beyond May 18 unless a list of demands is met to remove obstacles to its own grain and fertilizer exports. Cavusoglu was speaking to reporters on his return from a trip to Moscow.
“He said the grain deal was among the issues he discussed with his Russian counterpart Sergei Lavrov during the visit and that he hoped a positive result could be achieved in Istanbul, where talks were set to continue on Thursday.”
Butler noted that, “The United Nations said inspections resumed on Tuesday of outbound vessels under a deal allowing the safe Black Sea export of Ukraine grain. There were no inbound or outbound inspections of ships on Sunday or Monday.”
And a separate Reuters News article from yesterday reported that, “The Kremlin said on Wednesday that Russia’s stance on the Black Sea grain deal – that its own interests must be taken into account in talks aimed at extending it beyond May 18 – was understood by all relevant parties.”
“While Russian agricultural exports are not subject to Western sanctions imposed following the February 2022 invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance are a significant barrier to shipments,” the article said.
Dow Jones writer Kirk Maltais reported yesterday that, “Last minute talks to preserve the Black Sea Grain Initiative – the export deal reached last year allowing Ukrainian vessels to ship grains overseas – are being met with less interest from grains traders. While it isn’t clear what the outcome of these negotiations may be, wary traders are taking a risk-off stance.”
“With little direction on what the outcome may be, futures are not rallying the way they have when presented with the possibility of Black Sea exports being squashed,” Maltais said.
Elsewhere, the USDA’s Foreign Agricultural Service (FAS) indicated in a report earlier this week (“Russia Grain and Oilseed Exports Expand“) that, “The Black Sea region is a significant supplier of agricultural commodities to the world. Over the past year, global grain and oilseed markets have been roiled by Russia’s ongoing war in Ukraine. Initially Ukraine’s grain and oilseed exports via sea routes were entirely cut off but have since been able to flow, facilitated by the United Nations through the Black Sea Grain Initiative. Meanwhile, the European Union has become a key importer and transshipment point for Ukrainian grains under the ‘Solidarity Lanes’ initiative, including the Black Sea port of Constanta in Romania.
“Yet the most prominent exporter in the Black Sea region is Russia, from which strong exports continue to flow in 2022/23 and is forecast to reach a record for annual wheat exports.
Despite the Russian government claims of export challenges, Russia’s grain and oilseed exports have thrived during the current marketing year with ample supplies and competitive prices. Export volumes could be even larger, but the Russian government continues to apply export taxes and quotas, trade-restricting measures that are self-imposed.
FAS pointed out that, “Over the past decade, Russian production of grains and oilseeds has increased significantly due to both expansion of area for some crops and improved yields for others. In 2022/23, production increased for all major grains and oilseeds. In fact, Russia had record production of wheat, sunflowerseed, and rapeseed. Both barley and wheat are primarily winter crops that had been negatively affected by an ice crusting event in 2021/22 but rebounded with ideal weather conditions in 2022/23. Wheat production has nearly doubled from a decade ago.”
This week’s report noted that, “The chart [below] shows the increase in wheat exports to the Middle East, Africa, and other countries for the first 10 months of the marketing year for 2022/23 compared to the prior year.”
FAS also explained that, “Russian wheat exports are forecast to hit a record 45.0 million tons in 2022/23, up 36 percent from the prior year and 3.5 million tons above its previous record in 2017/18. This is well above the next largest exporter with EU wheat exports at 35.0 million tons.”
The report stated that, “Throughout 2022/23, Russia has benefited from large supplies, both beginning stocks and record production. Russia has exported significant quantities of both grains and oilseeds, despite its lack of transparent trade data. Additional sources of data validate the strong export volumes amid low prices.
“Nevertheless, Russia continues to apply trade-restricting measures such as quotas and taxes without which exports could be larger.”