Russia continues to complain that the deal is dependent on the West and blamed sanctions on logistics, bank payments, and shipping insurance that have slowed shipments of Russian fertilizer. Meantime, the Russian agriculture ministry revised the export tax for wheat increasing it by another 3.2%. Particularly, as of October 26, the export duty on wheat will increase to 3,028.0 from 2,934.3 rubles per ton a week earlier.

While Russia deliberately delaying the passage of 165 vessels carrying grain exports under the U.N. grain deal, Ukrainian Nibulon completed the first phase of its new grain export terminal at the Danube port of Izmail. Three Ukrainian ports ship grain down the Danube. Also, past week Europe’s largest land-based container terminal began operation near the Hungarian border with Ukraine. The terminal allows containers to be transferred between wide and standard gauge rail tracks and between trains and trucks. The terminal will increase Ukrainian grain shipments from the Adriatic Sea.

Secondary US rail rates rose 6% compared to the prior week and an astonishing 1500% compared to the same week last year. Barge traffic in the US resumed along the Mississippi River, a key artery for grain exports through the Gulf, although lagged behind their pace from a year ago, according to USDA’s weekly Grain Transportation Report. Export elevations were also firm, as wheat competes with corn and especially soybeans for available elevator space. Sluggish railroad performance, the consistently high value of the U.S. dollar, persistent dry weather in US wheat growing areas, and uncertainty over the Black Sea grain deal are all combining to keep grain prices high. 

Baltic Exchange’s dry bulk sea freight index posted a second straight weekly fall past week, weighed down by weaker demand for capesize vessels, which slipped to their lowest in nearly three weeks. BDI extended losses for the fourth straight session on Monday falling 1.2% to a three-week low of 1,797 points, amid weaker demand across all its vessel segments. The Ministry of Transport of Russia has prepared amendments to the “Code of Merchant Shipping (KTM)”, proposing to give the government the right to determine the list of goods of Russian cargo owners for transportation by domestic ships and set the cost of freight for their transportation. Logistics is the first key to the market’s secret. Multinational chemical company and fertilizer manufacturer Yara cut its European ammonia output to just 57pc of capacity in the third quarter as it struggled with swings in natural gas prices. Ukrainian nitrogen fertilizers producer RivneAzot was shot down after Russian missile attacks. Shortage or high cost of fertilizers across the globe is the second key to the grain market’s secret.

The third key is weather conditions. US corn prices eased slightly early in the session partly based on seasonal harvest pressure. The International Grains Council reduced estimated global corn output by 2 MMT to 1.166 billion in their latest update, versus year-ago totals of 1.217 billion metric tons. That came via cuts to the EU and U.S., only offset in part by an increase for China. Particularly, EU corn output is now seen down at 53.5 million tonnes versus 56.2 million previously, and the United States is now seen producing 353 million tonnes versus 354.2 million. Chinese grain (wheat, corn, barley, sorghum) imports Jun-Sep are 14.2 mln tonnes, vs 23.8 mln last year.

BdeC cut its projection for Argentine fields planted with corn to 7.3 million hectares from 7.5 million hectares estimated the prior week, down about 3% and blamed on the months-long drought. Meanwhile, Argentina’s corn farmers have to date planted 17% of their corn-designated fields for the 2022/2023 season, or down more than 9 percentage points compared to the same time during the previous cycle. The slow pace of corn planting is due to the lack of optimal soil humidity, the BdeC report noted, which is also seen hitting yields since early-planted corn tends to be more productive. The Rosario exchange, however, maintained its projections for the 2022/23 corn harvest at 56 million tonnes and its 2022/23 soybean harvest at 48 million tonnes. 

AgRural reported the Brazilian 1st crop corn was 46% planted as of 10/14. That was up 7% points through the week and is 1% point ahead of last year’s pace. Brazil’s Anec expected the country’s corn exports to reach 7.18 MMT in October, which is moderately above its prior forecast from a week earlier. 

The Stratégie Grains said EU corn production will fall to 50Mt this year. That is a “calamitously low” level, exactly 2.5Mt lower than its previous estimate and 28pc lower than last year. Grain maize harvesting in France has been nearly finished, with 92% of the area cut by past Monday, FranceAgriMer said. That compared with 83% the prior week and just 30% a year ago. Still, European users have already imported massive amounts from Ukraine and Brazil to offset the anticipated shortfall, so allowing the market “some breathing space”. 

 High volatility on geopolitics and planting campaign still run the wheat market. TMO and SAGO booked more than 1MMT, OAIC and Pakistan on the way. Topsoil moisture on Canadian cropland is rated 22pc adequate, 35pc short and 43pc very short. “Even the regions that started the year with a surplus of moisture are now becoming very dry”.

As of 18 October, 82% of the US was experiencing abnormal dryness/drought, according to the US Drought Monitor, including an estimated 70% of winter wheat areas. Russia planted 83% of planned winter areas, and Ukraine strongly decreased in areas (from 6,5 mln ha+ to not more than 3,9 mln expected for winter wheat, from which 79% are planted). 

Russia is considering an export quota on all grains, said Dmitriy Patrushev, the nation’s agriculture minister.  Patrushev said the export quota is 25.5 MMT of grain and would begin February 15 and end June 30. However, the minister did not indicate how much wheat was included in the quota. Also, the quota still needs government approval, but not seem restrictive.

Planting conditions in France remain very favorable for winter crops, with, however, temperatures still abnormally high for the season, leading to fears of sensitivity to come next spring in the event of frost. According to the farm office FranceAgriMer, indeed, French farmers had sown 46% of the expected soft wheat area for next year’s harvest by Oct. 17, compared with 21% a week earlier and ahead of year-ago progress of 36%. Farmers also advanced swiftly in winter barley sowing last week, with 67% of the expected area drilled by Monday against 37% a week earlier, FranceAgriMer’s cereal crop progress report showed. Winter barley sowing was also ahead of the pace last year when 54% of the area had been drilled by the same week. 

In this context, Stratégie Grains raised the 2022-23 EU wheat crop forecast by 1.4Mt to 125.5Mt. However, it is still down 3pc from the previous year. French Wheat Export to the Third Country: Loaded+Line up 1-24 October: 1.4 mt. Total export this season so far 5.1 mt (Crop 22 export potential increased to 9.9 mt, which means 52 % done so far). Regular flow during last days going mainly to Algeria, Morocco + 2 last Oct GASC vessels.

Argentina’s wheat crop has been seen sliding again due to prolonged drought plus a recent cold snap. The current 2022/2023 wheat crop, indeed, the past week was estimated at 15.2 million tonnes, down from the prior week’s forecast of 16.5 million tonnes, the Buenos Aires Grains Exchange said in its weekly report last Thursday. Freezes from Oct. 8-9 in key areas planted with wheat caused significant damage to expected yields, according to the exchange, which also reported that 53% of wheat-planted areas are experiencing between regular and bad conditions. That is a slashing in its production forecast by nearly 8%. Locals expect crop at 14MMT. 

Australia, according to the USDA attaché, is on the path to a third consecutive bumper grain crop in marketing year (MY) 2022/23 after a record-setting winter crop and strong summer crop production in MY 2021/22. Particularly, wheat production is forecast at 34 million metric tons (MMT), down from the record-breaking MY 2021/22 crop of 36.3 MMT but still the second-largest in history.  Similarly, barley production is forecast at 12.2 MMT, down from the previous year’s 13.9 MMT record. Crop quality and crop losses due to flooding remain uncertain. Successive rain is causing significant quality problems and yield losses in many parts of eastern Australia, with chickpeas, lentils and faba beans hard hit.

US soybean prices made modest inroads in the end week session, largely on support from soymeal and soyoil gains. Beans were also helped by a strong weekly export sales report. Midwest $3 crush margins is the one million dollar chance for farmers, without it forget about $14, the Export Arbitrage is pretty shut down. Argentina soybean crush tumbles 9% in September as farmers limit sales. But due to the drought Argentine farmers may opt to plant more land in soybeans, thus the exchange estimating that the planting area for the oilseed could reach 17 million hectares.

Safras and Mercado reported that 19.1% of the 22/23 soybean crop has been planted as of 10/14. That was up from 9.7% the prior week, but trailing 21% last year. AgRural estimated 24% of the crop was planted through 10/14, up from 10% last week and 22% last year. USDA attaché increased its forecast for soybean planted area to 42.8 million hectares for (marketing year) 2021/22, up previously from 42.5 million hectares. 

Brazil continues to expand its area due to record-high domestic soybean prices.  USDA attaché also forecasts a record harvest at 148.5 million metric tons (MMT), increased from 144 MMT previously with planting starting earlier this year as well.  The attaché increased the export forecast in 2022/223 to 95.7 MMT, an increase from 92 MMT. USDA attaché revised imports downwards due to ample supplies, now forecast at 300,000 metric tons (MT) for 2022/23.  For 2022/23, the attaché revised the forecast for soybeans destined for processing upward to a record of 50 MMT based on strong demand for Brazilian soybean products, especially oil.”

China’s soybean imports in September jumped 12% to 7.72 million tonnes from a year earlier, customs data showed, reversing a months-long trend of low arrivals. The arrivals were slightly higher than some traders had expected. However, though the September arrivals are higher than usual for this time of the year, overall imports for the first nine months of the year are still down 6.6% compared with last year at 69.04 million tonnes.

The high prices and lacklustre demand from the livestock sector earlier in the year curbed the appetite for soybean purchases. The increase in September arrivals came largely from the United States, which shipped 1.15 million tonnes to China last month, up from 169,439 tonnes in September 2021, customs data showed. Imports from Brazil slipped to 5.58 million tonnes versus 5.936 million tonnes last year. 

In China, the harvesting of soybeans continues. As for protein, the situation has not changed, there is still a large number of beans with a protein of 35%-37%, and buyers are actively looking for soybeans with a protein of 39.5%. The share of low-protein soybeans is about 70%, while soybeans with protein from 39% are only about 20% and about 10% of unripe beans with protein are about 36%.

In terms of forecasts, about 60% of market participants believe that the price of soybeans will continue to decline, based on the fact that there is a significant amount of supply in the market, plus large volumes of low-protein cheaper soybeans will be available to replenish stocks from for the purpose of cost reduction. Demand for soybeans remains at a low level, one of the only factors that provide price support is high prices for imported beans and an increase in the cost of soybean production domestically.

 Over the next months, we are likely to see a major difference between the prices of high-protein and low-protein soybeans.

According to the latest data from the Ministry of Agriculture of the PRC, the Chinese government aims to gradually increase the production of soybeans and increase self-sufficiency in this crop. By 2025, soybean production should increase to 23 million tons. Based on this, we can conclude that in order to achieve these indicators, it is necessary to interest the peasant to engage in soybeans. In the current season, we are likely to see an increase in purchases from the State Reserve of China, especially in terms of low-protein soybeans, to support farmers. On the issue of pricing, the state will also have to take steps to motivate farmers to increase the area under soybeans. Therefore, we will wait for the growth of purchase prices from the State Reserve.

Meantime, China’s third-quarter pork output reached 12.11 million tonnes, official data showed on Monday. Still, third-quarter pork output was slightly higher than the 12.02 million tonnes produced during the same period a year ago. China’s pork output reached 41.5 million tonnes in the first nine months of the year. That is up 5.9% from the corresponding period a year ago. The total pig herd also grew to 443.94 million heads at the end of September, up from 430.57 million at the end of June, the data also showed. Meantime, since the middle of June, hog prices have rallied more than 60%, apparently pushing up consumer inflation, and prompting repeated market intervention by authorities in Beijing.

According to China’s powerful state planner, the rally in prices is a result of farmers holding back pigs from slaughter as they wait for higher prices, while others seek to profit by raising pigs to heavier weights, although some analysts say the rapid rise in price is due to tighter supply of hogs.

In China, there is a significant increase in the volume of soybean processing, this is primarily due to the shortage of meal for the production of feed. Recently, there are even cases when feed manufacturers buy non-GMO soybean meal for their own needs. The increase in processing volumes has led to an increase in the supply of soybean oil on the market.

For rapeseed oil last week there were zero indicators for processing. Last week, 0 tons of rapeseed were processed, two weeks ago the volume of processing was only 7,000 tons. The volume of production of rapeseed oil from imported raw materials by years. In the current season, rapeseed processing volumes are much lower than the average values ​​for the last 3 years.

 Since September, there has been a high demand for rapeseed oil, in recent weeks SPOT deliveries are especially relevant, domestic buyers are not ready to contract volumes with delivery later than January

 The active period of rapeseed imports should start already in November, which will lead to an increase in processing volumes, and as a result, an increase in the supply of oil and meal on the market. But at the same time, low stocks of oil and strong demand will support prices. China is the fourth key to the market’s secret.  Is there a fifth?