Last week did not bring any significant changes or surprises on the global grain markets in terms of prices. During the period, uncertainty intensified, driven by deteriorating climate conditions across the ocean, military actions in the Middle East and Ukraine, as well as recent data on economic slowdowns in Germany and the UK.
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Why Is the Sunflower Market Not Doing Well?
Iliya Prodanov shared that currently, between 4,000 to 8,000 tons of sunflower seeds are being imported daily from Romania to Bulgaria, which is an exceptionally large amount. According to him, this is perhaps the processing capacity of all enterprises combined.
Neighbours of Ukraine Face Similar Problems
Slovakia has expanded its ban on importing Ukrainian grain in an attempt to protect local farmers. However, since the country exports about 50% of the grain it produces, the influx of cheap Ukrainian grain seriously affects the state's exports.
What Is Being Exported from Russia?
Last week, grain exports from the Russian port of Novorossiysk reached 552,400 tons, an increase of 123,000 tons compared to the previous week. Wheat exports amounted to 528,100 tons, and barley reached 24,300 tons.
Israel's Actions Work Against Exports from the Country
Bangladesh has announced an international tender for the purchase of 50,000 tons of milling wheat, which can originate from anywhere in the world, except Israel.
In Bulgaria, in an interview for BNR (Bulgarian National Radio), the Chairman of NGPA (National Grain Production Association), Iliya Prodanov, shared that currently, between 4,000 to 8,000 tons of sunflower seeds are being imported daily from Romania, which is an exceptionally large quantity. According to him, this is perhaps the processing capacity of all enterprises in Bulgaria combined.
In this regard, the association has submitted a letter to Prime Minister Nikolay Denkov and Agriculture Minister Kiril Vatev, urging the state to require additional documents for origin identification.
According to Prodanov, the importers are mainly Bulgarian oilseed crushers, and the goods mainly arrive on Moldovan trucks. The checks are only documentary since the goods enter as an intra-community supply transaction, not as an import. More in-depth checks by the state would help stop this process, according to NGPA's position.
In the Black Sea Region, over the past week, grain exports from the Russian port of Novorossiysk reached 552,400 tons, a rise of 123,000 tons compared to the previous week. Wheat exports stand at 528,100 tons, and barley at 24,300 tons. Wheat was delivered to Bangladesh (108,800 tons), Iran (68,000 tons), Sudan (65,500 tons), and Egypt (63,000 tons). Barley was exported to Tunisia.
137.2 million tons of grain have been harvested in Russia as of October 25, which is 10.9 million tons less than the previous year. The average yield is 3.08 tons per hectare. Harvested wheat is 93.1 million tons, barley 21.7 million tons, and corn 7.4 million tons. Among oilseeds, harvested sunflower seeds are 13.2 million tons, rapeseed 4.3 million tons, and soybean 5.5 million tons.
On the Old Continent, Slovakia has expanded its ban on importing Ukrainian grain in an attempt to protect local farmers. However, as the country exports about 50% of its produced grain, the influx of cheap Ukrainian grain to third markets seriously affects the country's exports.
Grain prices in Slovakia have fallen to a historic low, and local farmers say they are on the verge of collapse.
CGTN reported from the city of Trnava – an area often referred to as “the granary” of the country, where harvest has already been collected, grain is in the barns, and preparations for the next season are underway.
Farmers, however, face a dilemma of whether to sow crops for the next season, as local grain prices have fallen to $200 per ton. They blame the influx of cheap Ukrainian grain for this.
The Slovak government is trying to protect domestic production by banning such imports, in a year of record yields but this is not enough for local farmers, as Slovakia is a transit country for Ukrainian grain to for third markets.
According to Peter Marko from "AgroPodnik" farm, Ukrainian wheat is freely exported to the Czech Republic, Austria, Italy, and Germany - all traditional markets for Slovakia.
Slovak grain producers currently have to fight what they call "unfair competition" for their usual export markets. They say that Ukrainian grain producers grow grain under less strict rules outside of EU, using much cheaper labour, machinery, and fuel.
Hence, they can offer their grain on the EU market at prices lower than Slovakia. At the same time, the Slovak government aids in transporting Ukrainian grain to third markets. This was confirmed by Jozef Biresh, the Minister of Agriculture and Rural Development of Slovakia.
Biresh said that the imposed ban does not mean that the aid, especially for transporting grain through Slovakia to the place where it is needed, has stopped.
Now the government faces a very difficult task - how to continue to support Ukraine while preserving its own agricultural industry.
Across the ocean, as of October 23 in the USA, 59% of corn area has been harvested (compared to 59% a year earlier and 54% on average for the last five years) and 76% of soybean areas (compared to 78% last year and 67% on average for the last five years). Winter wheat has been sown in 77% of the planned areas (78% and 78%) with germination occurring in 53% of plantings (47% and 53%).
According to StoneX's forecast, recent rainfall in Australia allows for an increased wheat harvest estimate for 2023/24 to 26 million tons (compared to 23 million in the previous assessment). According to IKON Commodities, the harvest there will be 28 million tons (compared to 25 million in a previous report), and Rabobank expects 26.9 million tons. Last year's harvest was 39.7 million tons, and the average harvest for the last 10 years is 26.4 million tons.
Exports from Bulgaria in October
As of October 27, exports from the country exceeded 1 million tons of grain, mainly wheat. Currently, the largest exporters from the country remain Indonesia (295,000 tons), Spain (135,000 tons), China (120,000 tons), and Egypt (150,000 tons).
In terms of export commodity groups, wheat leads in terms of volumes (740,000 tons), followed by corn (80,000 tons), sunflower oil (45,000 tons), sunflower seeds (40,000 tons), rapeseed (30,000 tons), and barley (7,000 tons).
Global Grain Trade
According to Fedoil, in September the processing of the three main oilseed crops in the EU was 3.03 million tons, compared to 2.86 million tons in September '22. Rapeseed processing is at the level of 1.59 million tons (11% decrease compared to August and no change compared to September 2022), soybean processing reaches 0.95 million tons (15% decrease and the same as in 2022), and sunflower seeds processing is 486,000 tons (19% increase compared to August).
The total processing of all oilseeds since the beginning of the season is 28.98 million tons out of which 10.4 million tons are soybeans, 4.3 million tons are sunflower seeds, and 14.2 million tons of rapeseed.
In a visit to the United States, a delegation representing Chinese soy importers, signed an agreement with the U.S. Soy Export Council. Although the documents are not binding, they provide guidelines for future cooperation, and the projected amount in the documents is over 1 billion dollars. The last time a similar agreement was signed was in 2017.
According to Anec's forecast, Brazil's soybean exports in October are expected to reach 6.88 million tons (a 16% increase compared to September and 3.59 million tons in October 2022).
According to the latest forecast from IKAR, the corn harvest in Russia for 2023/24 will reach a record 17 million tons (16 million tons in the previous estimate and 15.8 million tons in 2022/23). Exports will reach 6.5 million tons (6 million in the previous estimate). The total grain harvest in Russia will be 142.2 million tons (compared to the previous 141.2 million), and exports 65 million tons (compared to the previous 64.5 million tons).
Due to drought in some parts of the EU, MARS lowered its forecast for the average corn yield for 2023/24 to 7.13 tons per hectare (a 21% increase compared to 2022/23, but a 5% decrease compared to the last five years). Sunflower yield is expected to be 2.1 tons per hectare (a 5% decrease).
On the international stage, Bangladesh's state grains buyer announced an international tender for the purchase of 50,000 tons of milling wheat, European traders reported. The deadline for submitting price offers is October 31, they reported. Wheat can be of any origin, except Israel.
Days earlier, the Taiwan Flour Millers’ Association announced an international tender in which they purchased 52,000 tons of first-class milling wheat to be delivered from the United States.
Iran's SLAL announced an international tender for the purchase of around 180,000 tons of corn for feed, European traders reported. At the moment, there are still no official data on the origin and date of delivery.
Black Sea Region
As of October 27, grain prices DAP Constanta, Romania were: milling wheat – 218 euros/ton, feed wheat – 202 euros/ton, corn – 185 euros/ton, barley – 177 euros/ton, sunflower seeds – 375 dollars/ton.
Farmers in Moldova are demanding the resignation of Agriculture Minister Vladimir Bolya and are threatening with a new protest if their demands are not met. The decisions were made at a congress organized at the beginning of the week by the National Federation of Agricultural Producers and the "Agricultural Power" Association.
According to the resolution adopted at the congress, which gathered hundreds of farmers, 2023 has been the most difficult year for the agricultural sector. The severe drought has significantly compromised the harvests of corn, sugar beet, soybeans, and sunflower. Costs for agricultural production have increased between 200 and 400% across various categories, while interest rates on loans have almost tripled.
At the same time, the massive import of agricultural products from Ukraine has significantly influenced the drop in domestic market prices for wheat, barley, corn, rapeseed, and sunflower seeds, farmers explain.
They complain that they are pressured by creditors to pay off their debts, but this is impossible since they have sold their grain at prices below cost, and the total losses are estimated at around 2 billion leu.
In this context, farmers insist on banning the import of wheat, corn, and sunflower until March 31, 2024, and to allow their transit only by rail.
Farmers also insist on doubling the National Development Fund for Agriculture to 3 billion leu, direct payments per hectare according to the EU model, compensation of 1.5 billion leu for corn and sunflower seed producers in 2024, and aid for those affected by the drought.
"If within the next seven days the government does not take real measures to meet our demands, we will resort to various mass actions both in the capital city and throughout the country, including the use of agricultural machinery," the congress resolution states.
Furthermore, associations insist on the resignation of the Minister of Agriculture and Food Industry, Vladimir Bolya, with accusations that he did not intervene on time to stop the degradation of the agricultural sector.
The minister further angered participants by saying that the authorities are looking for solutions to the farmers' problems but cannot interfere in the formation of market prices and advised farmers to change the direction of their business activities.
Hundreds protested this summer, bringing agricultural machinery to the center of Chisinau, after their demands were not met by the authorities as a result of the collapse in grain prices. At that time a compromise was reached between government officials and farmers after releasing 200 million leu out of the requested 700 million in the form of compensation for grain and oilseed producers.